EU Market: EU carbon extends 2.5-year high before profit-taking knocks prices back below €8

Published 17:34 on July 21, 2015  /  Last updated at 15:10 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

European carbon prices dipped on profit-taking on Tuesday after hitting a fresh two-and-a-half year high earlier in the session.

European carbon prices dipped on profit-taking on Tuesday after hitting a fresh two-and-a-half year high earlier in the session.

The Dec-15 EUA futures ended the day down 2 cents at €7.97 after opening at €8.06 and touching an intraday peak of €8.07 in the first minute of trade.

That was the loftiest level seen on the front-month contract on ICE Futures Europe since Nov. 2012, extending Monday’s €8.01 high.

Prices then fell as low as €7.92 before climbing back towards the end of the day.

“Some were happy to sell through €8, so that put the brakes on temporarily,” one trader said.

Another added that the market was due a breather following yesterday’s and this morning’s gains, which together saw the Dec-15 EUAs rise by as much as 4.1% over Friday’s €7.75 settlement.

“Hopefully the market’s now consolidating in a new trading range above €7.90,” he added, referring to the previous high for 2015 which was hit back in February.

Some 12.3 million units changed hands on the Dec-15s on ICE, with a further 6 million allowances traded along the rest of the curve including the daily futures.

Market participants said some buying appeared to be coming from utilities doing last-minute hedging before some traders go on holiday and ahead of lower EUA auction volumes next month, while selling pressures were emanating mainly from speculators.

EUAs were also supported by a firmer euro on Tuesday, which more than offset higher coal prices.

With German baseload power prices relatively flat, that meant the country’s calendar-year clean dark spreads gained around 4% each, climbing back towards last week’s highs.

Meanwhile, a group of 25 EU nations earlier in the day sold 2.918 million spot EUAs for €7.92 each, in an auction that cleared 2 cents below market and attracted bids worth a total 6.3 million units.

The UK will sell 3.123 million spot allowances on Wednesday.

EU governments are due to auction off a further 24 million EUAs in July – the busiest month on the 2015 sales calendar – before quotas drop by more than half to 27 million in August.

By Mike Szabo – mike@carbon-pulse.com

 

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