EU Market: Carbon recovers after auction-led dip, as analysts show little concern for UN outcome

Published 19:06 on December 1, 2015  /  Last updated at 19:20 on December 1, 2015  /  EMEA, EU ETS  /  No Comments

EU carbon prices were little changed for the second successive session on Tuesday after clawing back earlier losses from a weak government auction.

EU carbon prices were little changed for the second successive session on Tuesday after clawing back earlier losses from a weak government auction.

The Dec-15 EUA contract ended down 2 cents at €8.56 on ICE, near the top of the day’s €8.49-8.59 trading range on volume of 11.4 million.

Carbon has been relatively stable this week, though today’s range was slightly above Monday’s span of €8.53-8.62.

The benchmark EUA fell six cents to the day’s floor shortly after the EU’s auction of 2.9 million spot EUAs cleared 3 cents below market, though it did attract bid coverage of 3.19, slightly above the year’s 3.08 average.

The energy complex gave a bullish signal for carbon as German clean dark spreads widened slightly amid weaker coal prices, which got cheaper for European utilities as the euro rebounded from Monday’s more than six-month low.

Carbon traders and analysts are keeping only a passing glance on developments at the UN COP climate summit got derway in Paris, as even a successful deal is unlikely to have an immediate bearing on EU policy or energy use.

“As there is no direct policy linkage between EU policy and COP, we do not expect much price movement in relation to its outcome,” said analysts Energy Aspects in a weekly note.

“The impact on the EU ETS market will be modest, and the effects of international climate policy will not be felt on energy commodity markets for a while. Domestic policy is important to those markets, and Paris might speed up the uptake of low carbon policy – but only if it does not fail,” they added.

The analysts put the chances of a global agreement by the end of next week at no better than 50%, adding that they expect EUAs to trade within €8.50-9.00 for the rest of the year.

Meanwhile, CER prices dipped slightly on ICE on total volume of 461,000 units traded.

By Ben Garside – ben@carbon-pulse.com

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