EU Market: EUAs hold steady as traders foresee quiet week

Published 17:12 on April 7, 2015  /  Last updated at 12:55 on April 25, 2016  /  EMEA, EU ETS  /  No Comments

EUAs were steady on Tuesday as trade was subdued on low auction volumes and little progress expected in Brussels on the MSR.

EUAs were steady on Tuesday as trade was subdued on low auction volumes and little progress expected in Brussels on the MSR.

The Dec-15 futures trading on ICE Futures Europe ended down 3 cents a €7.16.

The bellwether contract traded in a narrow range between €7.09 and 7.24, with volume very light at around 6.7 million units traded.

On the EUA time spreads, just over 1 million units were traded on ICE.

European coal prices continued their fall with the Cal-16 contract dipping below $56/tonne, while German power also weakened by more than 0.5% across the board.

Softer coal helped support German dark spreads, which were trading within sight of their 2015 highs.

“The short-term technical picture looks (bullish) with the (Dec-15 EUA’s) MACD above zero and the 20-day moving average (MA) being close to crossing the 30-day MA,” said Bernadett Papp, an analyst with Budapest-based brokers Vertis.

“We expect a short and calm week with the price possibly moving in sideways above the 30-day MA, currently at €6.95.”

Most of the European carbon market was closed for Easter holidays on Friday and Monday, making this the second of two abbreviated trading weeks.

“Following on from the Easter break it is likely we see another subdued week of trading. Lower than average trading volumes and tight trading ranges are possible. With a quiet week of auctions, supply volume should be absorbed by the market with little fuss,” said Redshaw Advisors in a note to clients.

EU governments are due to auction just over 9 million spot EUAs this week, the lowest number so far this year.

In contrast, the UK will also sell 1.7 million EUAAs on Wednesday in the largest such offering in 2015.

EU nations auctioned 2.918 million EUAs for €7.08 each on Tuesday, in a sale that cleared at spot market prices at the time bidding ended.

While the next trilogue meeting regarding the MSR is not scheduled until May 5, Vertis’ Papp suggested market participants remain on their guard.

“Although there are no official meetings scheduled for discussing the MSR, we have to watch out for rogue comments or leaks from officials, MEPs or ministers which might flip the price one way or another,” she said.

By Mike Szabo – mike@carbon-pulse.com

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