CCERs trading on the Shanghai carbon exchange have soared 26% over five sessions to close Thursday at 18.60 yuan ($2.92) as speculative buying drove record volumes.
The past five trading days have seen 2.6 million CCERs change hands on the exchange at a total value of 41 million yuan ($6.4m), about a quarter of the exchange’s total offset dealings since CCERs began trading in January.
A further 1.2 million CCERs have traded OTC, making it the liveliest week ever seen in any of China’s seven pilot markets.
“The trading is driven by financial investors, not compliance buyers,” one trader told Carbon Pulse.
Daily volumes of over half a million offsets – tiny compared to the European market but huge for the early phase that China’s markets are in – represent a step change from last month, when brokers pushed CCER prices above allowances prices on just a tenth of the volumes.
Some observers said a small number of traders were picking up offsets hoping to be able to sell them on for higher prices when the national market launches in 2017, while others said the goal was to build a strong CCER price in Shanghai for when emitters return to market ahead of the compliance deadline next June.
The Shanghai exchange, the only Chinese carbon bourse reporting CCER prices on a daily basis, does not specify which category they belong to, so it is unclear whether they are Category 1 CCERs eligible for compliance or if they are unusable Category 3 offsets.
The spike in volume coincided with the NDRC issuing 9.4 million fresh offsets on Monday, including 3.4 million Category 1 offsets.
But market players said that issuance was unrelated to the increase in Shanghai trading.
“I think the CCERs trading now were issued earlier,” the trader said.
Given the uncertainty surrounding the eligibility of the offsets and lack of data-driven trading in the Chinese markets, some observers took a cautious view.
“At first glimpse the volume in Shanghai may make other pilots envious, but with scant fundamental data and the shape of the national scheme still opaque I would say the Shanghai offset market is on steroids,” said Chai Hongliang, an analyst with Thomson Reuters Point Carbon.
By Stian Reklev – stian@carbon-pulse.com
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