Spot NZUs fell 2% over the week to close Friday at NZ$5.95 ($4.43), a 10-week low, as traders were preoccupied with this month’s surrender deadline.

The contract ended a week in the NZ$5s for the first time since Feb. 27, with trading volumes drying up, according to market participants.

“There is little trading occurring at present with many buyers appearing comfortable with levels and/or positions. Selling has dried up also with both small and large forest owners absent,” brokers OM Financial said in a note to its clients.

“It does appear many portfolios are in lock-down until May 31st when the surrender date for 2014 passes.”

Given that emitters can use UN offsets for compliance this year, short-term interest in NZUs is limited, although some traders say the market is likely to pick up again after the compliance procedures.

Meanwhile, the government indicated in its INDC consultation paper released Thursday that the ETS review slated for later this year might end in changes to scheme designed to help New Zealand achieve bigger emission cuts.

“This year we will start to consider how the current settings under the New Zealand Emissions Trading Scheme are placed to deliver on our target,” it said, without adding further detail.

By Stian Reklev – stian@carbon-pulse.com