EU Market: EU carbon rises on strong auction, MSR vote optimism

Published 10:10 on July 7, 2015  /  Last updated at 15:08 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

EU Allowances closed 1.2% higher on Tuesday, bolstered by a strong auction, erased losses on German power and optimistic signals out of the European Parliament ahead of tomorrow's MSR vote.

(Updates with market close)

EU Allowances closed 1.2% higher on Tuesday, bolstered by a strong auction, erased losses on German power and optimistic signals out of the European Parliament ahead of tomorrow’s MSR vote.

Front-year EU Allowance futures ended up 9 cents at €7.48, off the day’s peak and four-day high of €7.51.

Volume on the benchmark contract was seasonally strong at 13.8 million, while trading activity was healthy down the rest of the curve at 11.8 million, most of which was done in block trades.

“Today’s auction was quite strong, clearing above market for the first time in a while.  Power came back from earlier losses, and there’s optimism around tomorrow’s MSR vote,” one trader said.

The EU sold 2.92 million spot EUAs for €7.35 each, a cent above the price for the Dec-15 futures on ICE at 0900 GMT, the time the auction’s bidding window closed.

Spot permits are currently valued at a discount of 3 cents to the Dec-15s, meaning the auction cleared 4 cents above market, the highest premium recorded in a government EUA sale this year.

The auction attracted total interest from 18 bidders equivalent to 8.94 million units, translating to an oversubscription rate of 3.06, the highest since July 2.

The permits were split between 6 buyers, fewer than half of the average of 13 seen in EEX-hosted auctions so far this year.  This, along with the strong clearing price, indicated that some buyers had bid aggressively.

Meanwhile, German calendar-year baseload power dipped across the board but was off earlier lows.

The European Parliament will tomorrow vote on the MSR, in a final plenary ballot on the measure that’s widely expected to pass comfortably.

Senior MEPs from the six of the biggest political groupings in the parliament – representing 87% of all seats – spoke in favour of the reserve during a debate on Tuesday. https://carbon-pulse.com/main-mep-groupings-reiterate-support-for-msr-ahead-of-vote/

Carbon bucked lower equity markets and a weaker euro, which dropped amid concerns over Greece’s future, as eurozone leaders held an emergency summit over the country’s future.

Front-year CER futures added 3 cents to end the day at 45 cents, matching a one-month high touched last week.

A total 679,000 units changed hands on ICE’s Dec-15 CER contract.

By Mike Szabo – mike@carbon-pulse.com

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