EU Market: EUAs slip as market awaits direction from ETS data release

Published 18:05 on March 29, 2016  /  Last updated at 18:05 on March 29, 2016  / Ben Garside /  EMEA, EU ETS

EU carbon prices fell slightly on Tuesday, the first session after the four-day Easter holiday, with analysts predicting a stable week ahead of Friday’s release of 2015 emissions data.

EU carbon prices fell slightly on Tuesday, the first session after the four-day Easter holiday, with analysts predicting a stable week ahead of Friday’s release of 2015 emissions data.

Front-year EU Allowance futures on ICE settled down 7 cents at €4.79, near the mid-point of the day’s tight trading range of €4.75-4.84.

Turnover was very modest at just over 6 million units, a total dwarfed by volume of 14.8 million on the normally less-liquid Dec-17 contract, all but 566,000 of which were block trades.

Prices remained within reach of the year-to-date low of €4.62 hit in February, but held above last week’s low of €4.70 despite a mixed auction result.

Prices nudged a few cents higher after the EU’s spot auction cleared at €4.75 at 0900 GMT, a cent above market, though bid coverage of 1.99 was below the year’s average of 2.21.

The energy complex gave little direction, with German clean dark spreads increasing slightly on weaker carbon while power and coal prices were little changed.

Analysts predicted a neutral week for EUAs and gave Friday’s emission data release only a marginal chance of having a price impact.

“We do not expect this event to deliver a price driving signal unless the actual number differs by more than 2 percentage points from the market’s expectation,” said Thomson Reuters Point Carbon analysts in a note to clients, adding that other market signals were seen providing little direction.

A Carbon Pulse poll published earlier this month showed the average call from six analysts was for 2015 ETS emissions to rise by just 0.2% year-on-year.

“The market consensus expects a -1% to +1% change from 2014’s emissions. Anything out of this range might trigger additional trades,” said Bernadett Papp of brokers Vertis in a blog post.

She pegged the market’s nearest support level at last week’s low, followed by the year’s bottom of €4.62. To the upside, she said nearest resistance was at the 20- and 30-day moving averages at €4.94 and €4.97 respectively.

Redshaw Advisors had a slightly bearish outlook, reflecting on carbon’s lack of recent gains despite relatively low supply from government auctions.

“The market’s inability to rise in a succession of low supply weeks at a time when there is demand from compliance year-enders continue to give us a neutral-to-bearish view,” they said in a note to clients.

Governments will sell 13.87 million spot EUAs over this four-day trading week, slightly up on last week’s 13.76 million. Next week, auction supply hits 17.25 million over five sessions.

Front-year EUA prices ended below the technical ‘pennant’ formation, which has been taking up some market attention in recent days, but without any sharp break-outs that can often accompany an exit from this pattern.

“It’s ‘as you were’ with the chart telling us nothing’s really going on unless we can either get below €4.62 or above €5.49. Yawn!” said Clive Lambert of technical analysts FuturesTechs.


After market close on Thursday, the Commission will update the status of 2016 allocation of free allowances.

This could have a bearing on prices as cash-strapped firms could opt to sell some of their quotas upon receiving them, although the previous update showed only Italy, Finland and Spain had yet to start the process.

On Friday at 1000 GMT, the Commission will open up installation-level 2015 verified emissions data on the European Union Transaction Log (EUTL) website.  The raw, preliminary data will also be published simultaneously in an Excel spreadsheet on the Union Registry page of the Commission’s website.

The data is published irrespective of irrespective of the amount of data submitted by scheme participants, but in recent years compliance has been high and the final data has only required minor adjustments to initial projections.

By Ben Garside –