Spot NZUs edged upwards by 2% this week to close Friday at NZ$6.60, but with buyers reluctant to follow when sellers eyed a push towards the NZ$7 level.

The permits traded in a narrow NZ$6.40-6.55 range for most of the week, but moved up to NZ$6.60 late on Friday. Both CommTrade and Carbon Match showed NZ$6.75 as their best offer by Friday close.

“Many buyers continue to queue at lower levels and the smart money is buying at current levels. We do think the $7 level is close to being breached and we are confident there is volume at or around that level,” brokers OM Financial said in a note to clients.

Trades go through mostly in small clips, and although some observers say bigger volumes from forest-owners are available at NZ$7 and above, the demand side is not showing any urgency to follow.

Emitters are currently finalising their 2014 emission reports, which must be submitted to the government by Mar. 31.

Given that they can still meet their 2014 obligations with UN offsets, they have more than a year until they need to cover their emissions by using NZUs alone.

With the ETS due for a review in the meantime, many buyers are happy to sit back and observe for now, traders said.

By Stian Reklev – stian@carbon-pulse.com