The bullish momentum in the New Zealand carbon market continued Tuesday, as persisting demand pushed spot NZUs to yet another year-high.

The spot contract closed at NZ$12.85 ($8.84) on CommTrade, up 20 cents on the previous session. After a quiet start, the price was bought up late in the day.

NZUs have now reached their highest levels since Nov. 2011 in five of the last seven trading sessions.

“If yesterday’s buying interest resurfaces, there is a good chance NZUs will trade at $13 by week end,” brokers OM Financial said.

By closing time, the best offer on CommTrade was NZ$13, while bidders had retreated to NZ$12.50. The spread on Carbon Match was somewhat tighter at NZ$12.60-NZ$12.85.

With prices up nearly 65% since November, there is more supply available in the market as more forest-owners are willing to sell at current levels.

Demand remains strong as emitters anticipate the government will drop the 2-for-1 rule, meaning they might soon need to surrender twice as many NZUs each year to cover their emissions.

By Stian Reklev – stian@carbon-pulse.com

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