Spot allowances in New Zealand’s emissions trading scheme barely moved throughout the week and closed Friday at NZ$6.85 ($4.51), unchanged from last Friday as traders continue to await news on the upcoming ETS review.
The spot allowances never left the NZ$6.80-6.85 range and only some 125,000 NZUs changed hands during the week, according to market participants.
“Both demand and supply are missing, but fresh demand would bring the supply back fairly quickly,” one market participant said.
Forest-owners continue to hold back their potential supply in the hope that prices move up in the long-term, while emitters are content in the knowledge that there is a short-term surplus in the market and 10 months until the next compliance deadline.
“If there is a pullback from these levels we expect buyers to jump in – limiting the magnitude of any sell off,” brokers OM Financial said in a note to clients on Friday.
Traders are still waiting for news on the terms of reference for the upcoming ETS review, as that might provide some indication of the extent of rule changes the review may bring about.
But the review will not be finalised until after the Paris climate summit in December, so the terms of reference, when published, are unlikely to have an immediate and dramatic impact on prices.
By Stian Reklev – firstname.lastname@example.org