This newsletter was published 13.12.2023 at 19:14pm CEST

The current prices on the European carbon market are as follows:

EUA weakness persisted through the options expiry today, with the reference price barely reaching over 68 EUR—only 2 EUR higher than the yearly lows. Both volatility and volume remained subdued in comparison to year-end expiries in previous years. The supply side will be impacted starting next week, as only three more daily auctions are scheduled for this year. Historically, periods without auctions have led to a gradual increase in prices due to a lack of supply. The upcoming release of the auction calendar by EEX will determine how long the pause will be, however it will be a minimum of 3 weeks. Despite the impending reduction in supply, funds have increased their net short position by 3 million EUA, totaling around 42 million EUA. This reflects a steadfast belief that EUR prices might still be too high and could follow the downward trend of power prices, which have decreased by over 50% this year. While short volumes will eventually need to be closed out, it seems likely to occur at lower levels. All attempts by buyers to push prices up are promptly countered, indicating a challenging market dynamic. The 50-day average price now stands approximately 7 EUR above the market price, while the 200-day average price is 16 EUR higher. The last time EUA traded above these long-term average prices was at the end of August, and since then, the downtrend has only been accelerating.

German power prices are down by 10.70 EUR since last week, with the front year contract trading at 91.35 EUR/MWh. API2 coal prices are down by 9.25 USD since last week, with the Cal-24 contract trading at 101.25 USD/tonne. Front year gas prices are down by 2.75 EUR since last week, with the TTF Cal-24 trading at 37.100 EUR/MWh. EUR/USD is unchanged and is currently trading 1.0790.

Price development of EUA Dec2023 futures contract