Spot NZUs ended unchanged at NZ$10.05 ($6.79) on Friday, as the market slowed down after 5.8% of gains earlier in the week that saw the contract break through the NZ$10 level for the first time since December 2011.

Close to three-quarter of a million allowances changed hands over the week, and by the end of Friday, NZUs were bid at NZ$10.00 on CommTrade and NZ$10.05 on Carbon Match, while offered at NZ$10.10 on both platforms.

“We expect to see more liquidity in the market as a result of added interest at these levels,” brokers OM Financial said in an emailed note.

The allowances have now gained 46.7% over the past six months as confidence have built that the government will abolish some of the ETS provisions that have muted demand in recent years.

However, traders will keep a close eye on the forestry part of the ETS review, after the government on Thursday sought feedback on a new accounting methodology that experts say could bring about a wave of short-term supply, potentially undoing recent price gains.

By Stian Reklev – stian@carbon-pulse.com

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