EU Market: Permit prices rise to 7-day high on scarce supply

Published 16:55 on December 22, 2015  /  Last updated at 16:55 on December 22, 2015  /  EMEA, EU ETS  /  No Comments

European carbon prices climbed to a seven-day high on Tuesday on the back of year-end buying amid firmer dark spreads and thin supply and liquidity.

European carbon prices climbed to a seven-day high on Tuesday on the back of year-end buying amid firmer dark spreads and thin supply and liquidity.

Front-year EU Allowance futures trading on ICE were up 7 cents at €8.33 by 1636 GMT after rising as high as €8.36 – the highest level seen since Dec. 11.

Turnover was low at 5.9 million units changing hands.

Government permit auctions are on hold until January, and coupled with a lack of EUA sellers means supply has dried up somewhat, one trader said.

Last year, EUA prices rose in the run-up to Christmas, but then retreated during the last week of 2014 and first week of 2015.

A stronger euro also supported carbon on Tuesday, pushing Calendar 2016 Rotterdam coal prices below €40/tonne for the first time in more than a decade.

The Cal-2017 and 2018 futures also fell to new lows in euro terms, making fuel for the EU’s dirtiest power plants even cheaper.

German baseload power also edged higher, lifting the country’s 2017 and 2018 clean dark spreads by 2-3%.

EUA trading volumes are expected to drop further as the year-end approaches, and especially Christmas and New Year’s, meaning further prices moves could be amplified.

Meanwhile, CER prices were mixed with the daily futures on ICE added 3 cents to €0.54 and the Dec-16 futures shedding 3 cents to €0.46, both on low volumes.

By Mike Szabo – mike@carbon-pulse.com

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