EU Market: EUAs soar back above €7 after EU official predicts MSR completion

Published 18:22 on March 4, 2015  /  Last updated at 14:50 on May 11, 2016  /  EMEA, EU ETS

European carbon prices climbed back above €7 on Wednesday, spurred by strong buying triggered by comments from a senior EU official, traders said.

European carbon prices climbed back above €7 on Wednesday, spurred by strong buying triggered by comments from a senior EU official, traders said.

The benchmark Dec-15 EUA futures, trading on ICE Futures Europe, settled up 30 cents at €7.08 on heavy volume of nearly 24 million units traded.

Speaking at an emissions trading conference in Amsterdam, Peter Zapfel said he was confident that Latvia, current holder of the rotating EU presidency, would complete an agreement on the MSR by the end of the country’s term in June.

“There seems to be a trend that comments made at these conferences are bullish … and those made today certainly buoyed the market,” one trader said.

Participants in the EU ETS are eagerly awaiting approval by lawmakers of the mechanism to raise EUA prices through curbing supply, but some doubt had been cast on the plan’s future in recent days following comments from a faction of mainly eastern European countries led by coal-addicted Poland.

They want the MSR to start in 2021, as originally proposed by the European Commission, despite the EU Parliament’s environment committee last month agreeing that it should come into force in 2019, and calls from other countries for an even earlier start.

EUA prices fell to a 2015 low of €6.66 in the first 35 minutes of trade on Wednesday – a technical level around which buying support has emerged over the past few months – before rising on Zapfel’s comments to hit an eventual intraday high of €7.11, the loftiest level seen since early Monday.

“A lot of volume has gone through today, especially considering the conference is taking place,” the trader added.

Trading volumes tend to be lower during the 2-3 conferences on the European carbon market calendar that attract traders.

Meanwhile, German power also gained with the Cal-16 Phelix baseload futures, trading on EEX, adding 7 cents to €32.71/MWh, while Cal-16 ARA coal futures dipped 5 cents to $62.15/tonne according to ICE.

CERs failed to trade on Wednesday, with the benchmark Dec-15 futures settling down 1 cent at 40 cents, and the spot contract settling at 2 cents.

By Mike Szabo – mike@carbon-pulse.com