NZ Market: NZUs halt slide but focus on UN offsets as compliance deadline looms

Published 06:36 on May 29, 2015  /  Last updated at 00:07 on October 13, 2015  /  Asia Pacific, New Zealand  /  No Comments

Spot NZUs halted the downward slide this week and closed Friday at NZ$5.25 ($3.75), a 2% gain on last week but on low volumes as traders primarily chased ERUs.

Spot NZUs halted the downward slide this week and closed Friday at NZ$5.25 ($3.75), a 2% gain on last week but on low volumes as traders primarily chased ERUs.

Spot NZUs stayed within a narrow NZ$5.25-5.30 range throughout the week, and closed Friday at the low end of that, 10 NZ cents above last week’s closing price.

“People have been busy getting units to meet their compliance, so there has been some last minute buying, although that seems to be over now,” one trader told Carbon Pulse Friday afternoon.

The buy interest was primarily with UN-issued ERUs, which are available at less than 10 NZ cents a piece and can still be used for compliance this year, the last time UN offsets are eligible for NZ emitters.

The compliance deadline is Sunday, and as of Monday, NZUs are the only eligible units in the New Zealand ETS.

But with another year to go before the next compliance deadline, traders did not expect an immediate upswing in NZU demand.

“It’s a long way so in the short term not much will happen,” the trader said.

The next events n traders’ calendars are New Zealand’s INDC and the planned review of the ETS.

Brokers OM Financial said this week it expected the government to set a 10% below 1990 target for the post-2020 period in the INDC – barely lower than the 5% target by 2020 – and that the ETS review would lead to phasing out the ‘1 for 2’ rule and grandfathering.

By Stian Reklev – stian@carbon-pulse.com