EU carbon prices fell on Wednesday as speculators looked to cash in on recent gains and had little appetite for new bullish bets.
The benchmark Dec-15 EUA contract ended down 4 cents at €8.57 on ICE, near the middle of the day’s €8.51-8.64 range on steady turnover of 11.7 million units.
The day’s top trade extended the previous session’s one-week high by 2 cents, but the gains could not be sustained following two positive days that have seen carbon climb some 5% to get within reach of the year’s high of €8.71.
One trader said the price gains had “paused” as speculators took profits, but they expected EUAs to resume an upward trajectory later this week.
Poland’s afternoon sale of 2.86 million spot EUAs cleared at market, with bid coverage of 2.81 – close to levels seen earlier this week.
There was a bullish signal from the energy complex, as German power prices surged in afternoon trade on EEX. But this helped the German dark spreads merely recoup ground lost on Tuesday, remaining near multi-month lows.
EUAA DISCOUNT SHRINKS
The morning’s UK EUAA auction – the last aviation permit sale of the year – cleared 19 cents below the Dec-15 EUAs on ICE, the smallest discount seen since Mar. 25 and well below the 29-cent average since then.
The 14 EUAA sales this year have offloaded 16.4 million units, which can only be used by airlines for compliance.
CERS REACH YEAR-HIGH
Dec-15 CERs rose by as much as 3 cents to €0.68 on ICE to extend Oct. 7’s one-year high by two cents, on turnover of 17,000 units.
The normally thinly-traded CERs saw a block trade of 650,000 credits on the Dec-16 contract, a day after what appeared to be a spot-Dec16 spread play of 509,000 units to presumably take advantage of the steeply backwardated front-end of the futures curve.
The CER price rise also comes on the deadline day for Annex I countries to transfer enough carbon units to cover their 2008-2012 emissions under the Kyoto Protocol, potentially locking up any CER or ERU credits that have not been transferred to accounts in the CDM registry or the UK, which is one of the only countries to allow a limited amount to be carried over to Kyoto’s second commitment period.
By Ben Garside – ben@carbon-pulse.com
