Spot NZUs closed at NZ$9.60 ($6.26) on Friday, 3 NZ cents up on the previous day but well below the highs of earlier this month, as buyers were seen to have paused their purchases for the time being.

The New Zealand carbon market was unusually active in the first couple of weeks of January despite many traders being away on summer holidays.

Some 250,000 allowances traded, with the price hitting a peak of NZ$9.85 on Jan. 12 – the highest in the market since Dec. 15, 2011.

But prices have come down this week as compliance buyers have met their needs for now, according to market participants.

“The market has come off its highs. Buyers are happy to wait and see where it goes from here, but sellers are not keen to offer the price down,” said one broker, who expected NZUs to continue trading in the NZ$9.50-9.70 range over the next couple of weeks.

The steep price hike from NZ$6.70 on Oct. 1, 2015 to the mid-9s by year-end, a rise that was largely fuelled by the government’s ETS review paper, had created expectations that NZUs might break through the NZ$10 level soon.

“It seems like many are still watching and finding the higher prices hard to stomach, but as the ETS review progresses the sellside expectations seem to remain pretty firm,” another observer added.

By Stian Reklev – stian@carbon-pulse.com

Not yet signed up to CP Daily? Subscribe to our free newsletter here