SK Market: Korean offsets hit record high for second consecutive day

Published 07:52 on February 18, 2016  /  Last updated at 10:29 on February 18, 2016  /  Asia Pacific, South Korea  /  No Comments

Korean Carbon Units (KCUs) gained 10% in Thursday's trade, trading up to 16,500 won ($13.41) to hit a record high for the second day in a row as supply remains severely restricted.

Korean Carbon Units (KCUs) gained 10% in Thursday’s trade, trading up to 16,500 won ($13.41) to hit a record high for the second day in a row as supply remains severely restricted.

The offsets jumped 9.6% on Wednesday in the first recorded trade since Dec. 29, hitting the previous all-time high of 15,000 won.

A small clip of 3,000 KCUs traded on the Korea Exchange at 16,000 won on Thursday, before 230,000 offsets traded OTC at 16,500 won, a trade that was later cleared on the exchange.

“This shows a lack of supply. Prices have now nearly doubled from the start [of the ETS],” one market participant told Carbon Pulse.

Liquidity in the Korean carbon market is near non-existent as emitters claim they have been given 10-20% fewer permits than they need.

More than 40 lawsuits have been filed against the tight allocation levels.

In addition, some 6 million CERs have been cancelled and converted to Korean offsets, but that only equals around 1% of the scheme’s total annual allocation, so their impact on the overall market has been modest.

“I guess business will increase their opposition (after the new record high),” the trader said.

Trading in the market has been sporadic since the ETS began in Jan. 2015, but the exchange has yet to record a daily drop in KCU prices.

Korean Allowance Units closed unchanged Thursday at 12,800 won.

By Stian Reklev – stian@carbon-pulse.com

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