EU Market: EU carbon edges higher as CERs jump

Published 17:59 on July 1, 2015  /  Last updated at 15:09 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

EU Allowance prices edged higher in light buying and time spread trading, while CER prices posted a 7.5% gain amid renewed activity.

EU Allowance prices edged higher in light buying and time spread trading, while CER prices posted a 7.5% gain amid renewed activity.

Front-year EUAs settled 4 cents higher at €7.50 after trading in a narrow range between €7.44 and €7.53.
Volume was moderate at 11.7 million units traded, some 5.1 million of which was via block trades on ICE.

“The block volumes look like spot-Dec15 (time spread) trades. There was nothing big down the curve, as compliance deadlines are long gone and client trading is sparse,” one dealer said.

“It’s the start of the quiet period, and from ringing around it’s clear that a lot of people have now gone on holiday.”

Coal for delivery in Europe shed 65 cents or more than 1%, and that helped beef up the German calendar-year clean dark spreads slightly after the Cal-17s and 18s hit a three-month low on Tuesday.

Separately, the Dec-15 CER futures rose to a one-month high of 44 cents before settling at 43 cents, a daily gain of 3 cents.

Volume was notable with 585,000 done via screen and block trades, with a further 500,000 transacted EFP.

Another 500,000 changed hands EFP on the Dec-16s, indicating the pair likely made up a time spread trade.

CER volumes have increased noticeably in the past week, but traders have been unable to explain why.

Some have suggested that speculators are taking a punt on prices rising on the back of a Dutch court’s recent decision to force the Netherlands to deepen its 2020 climate target, and on the UN’s aviation body eventually deciding to adopt a market mechanism that would be primarily be supplied with CERs.

Meanwhile, a group of around 25 EU nations earlier in the day sold 935,000 spot EUAAs for €7.16 each, in an auction that cleared 33 cents below the Dec-15 EUA futures at the time the bidding window closed.

The sale attracted bids worth 4.1 million units from 12 participants – the most since January.

Government EUA auctions resume on Thursday, with the EU offloading 2.92 million before Germany sells 3.2 million on Friday.

Next week sale volumes rise back up to 15.08 million after this week’s 11.95 million.

By Mike Szabo – mike@carbon-pulse.com

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