EU carbon fell for the seventh consecutive session on Thursday to extend a 22-month low to €4.62 as falling power prices deterred buying.
The Dec-16 EUA contract settled down 14 cents or 2.9% at €4.75 on ICE, compounding the week’s heavy losses, with prices down almost 15% since last Friday.
Market watchers pointed to today’s relatively becalmed trade and lower volume as a sign that an end might be approaching to the downturn that has slashed as much as 44% off carbon since the end of 2015.
Today’s turnover was still historically high at 20.3 million on a trading range of 29 cents, but volume has twice topped 28 million this week with daily ranges above 30 cents.
“I guess there’s some room still for prices to fall unfortunately, but not too much, maybe to €4.30-4.40. It’s become a critical situation for the market and its credibility,” said one broker.
He flagged this potential support level because it was close to average prices in 2013, the year carbon briefly bottomed out below €2.50 when lawmakers made heavy weather of passing Backloading legislation.
Signals from the energy complex were mixed, with German power prices continuing the week’s pattern of matching carbon’s losses. The next-year baseload contract fell 30 cents on EEX to €20.85/MWh.
But German clean dark spreads nudged higher to claw back some of the week’s lost ground as a stronger euro helped make weaker coal prices even cheaper for European utilities.
EUAs nudged higher after a strong EU morning auction result. The sale cleared 3 cents above market and with bid coverage of 2.38, above the 2.18 average so far this year.
By Ben Garside – firstname.lastname@example.org