EU Market: EUAs pushed higher by coal-fired profitability

Published 18:51 on November 19, 2015  /  Last updated at 18:51 on November 19, 2015  /  EMEA, EU ETS  /  No Comments

European carbon prices edged higher on Wednesday, as profitability for German coal-fired power plants jumped for a second straight day.

European carbon prices edged higher on Wednesday, as profitability for German coal-fired power plants jumped for a second straight day.

The front-year EUA futures trading on ICE gained five cents to settle at €8.63, near the top of the day’s €8.55-8.64 trading range.

The top trade matched the two-week high touched on Wednesday.

Turnover on the benchmark Dec-15s was at 9.4 million units, with a further 6 million transacted along the rest of the curve.

Prices were bolstered by higher German power prices, which inflated the clean dark spreads.

The Cal-16 baseload contract on EEX settled up 0.6% at €29.15/MWh, ending above €29 for the first time since Nov. 10.

Coupled with a stronger euro and flat coal, it added between 6% and 12% to the calendar-year dark spreads.

They are now trading back near last week’s levels, recovering by as much as 28% after having hit their lowest in more than six months earlier this week.

Meanwhile, a group of 25 EU nations sold 2.918 million spot EUAs for €8.57 each, in an auction that cleared a cent below market and attracted bids from 22 participants worth a total 9.5 million units – both the highest seen in nearly two weeks.

Germany will sell 3.198 million allowances in Friday’s sale.

After that, governments will have 3.5 weeks’ worth of sales remaining, which will bring a total 50.7 million EUAs to market before the onset of the end-of-year holiday break.

The European Commission, along with Germany, the UK and Poland, which organise their own allowance sales, will likely publish the 2016 auction calendar within days.

By Mike Szabo – mike@carbon-pulse.com

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