EU carbon prices climbed to as high as €8.38 on Wednesday, extending last week’s 33-month high by two cents after the UK’s auction cleared above market.
At 0900 GMT, the UK sold 1.5645 million spot EUAs on ICE for €8.30 in a sale that was more than 3 times oversubscribed and cleared 3 cents higher than levels in the secondary market.
This immediately pushed benchmark Dec-15 EUA futures prices up from €8.30 and within five minutes they had breached the €8.36 support level to hit the new peak not scaled since Nov. 2012.
They fell back and eventually settled at €8.35, a seven cent daily gain, on thin turnover of 9 million on ICE.
There was little direction from the energy complex, with German baseload clean dark spreads little changed as gains in carbon were offset by losses in dollar-denominated coal.
Coal for 2016 EU delivery is trading at 12-year lows of $52.85 a tonne as a rise in output from exporters like Australia combines with a slowdown in orders from major importers China and India.
Most carbon auctions clear slightly below secondary market levels, providing an incentive for financial institutions to participate, though last week two of the four sales cleared above market.
Carbon rose 54 cents or 7% last week as government auction supply is half the usual due to a scaled-back holiday sales calendar, which extends for a further 1.5 weeks.
Below are the auctions this week, distance to market, bid-to-cover ratios:
8/17/2015 EU 1,459,000 +€0.01 v market, btc 4.12
8/18/2015 EU 1,459,000 -€0.02 v market, btc 4.20
8/19/2015 UK 1,564,500 +€0.03 v market, btc 3.25
8/20/2015 EU 1,459,000
8/21/2015 DE 1,599,000
By Ben Garside – firstname.lastname@example.org