EU Market: EU carbon firms on solid auction, energy price rebound

Published 17:34 on August 25, 2015  /  Last updated at 15:16 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

European carbon prices rose on Tuesday on a strong EU auction and as energy and equity markets rebounded following heavy losses on Monday.

European carbon prices rose on Tuesday on a strong EU auction and as energy and equity markets rebounded following heavy losses on Monday.

Front-year EU Allowance futures added 8 cents to close at €8.26, after trading as high as €8.29.

Volume on the benchmark contract was moderate at 7.4 million units changing hands, with a further 3.4 million done along the rest of the EUA curve.

A group of 25 EU nations earlier in the day sold 1.459 million spot allowances for €8.22 each, in an auction that cleared 2 cents above market.

Prices climbed on the result, despite bidding interest equivalent to just over 5 million units, which was slightly under the August average of 5.2 million.

Selling pressure late in the day weighed on prices, pushing them back down to €8.22 before buying countered to lift them back to €8.27 in the final five minutes of trade.

German calendar-year baseload power prices firmed after touching 12-year lows below €30/MWh on Monday.

However, they were offset by a weaker euro and higher coal prices, and this combined with more expensive carbon to soften the German clean dark spreads.

Energy and equities were spurred by China’s central bank cutting interest rates in response to steep falls in the country’s stock market this month, and by it lowering the reserve requirement ratio, which sets how much money China’s banks can lend out.

Global markets plummeted on Monday over fears China’s economy was slowing and the attempts by the Chinese government to stem the country’s equity market losses.

Meanwhile, front-year CER prices trading on ICE Futures Europe firmed to settle at 50 cents on volume of 136,000.

Below are this week’s EUA auctions, clearing price, distance to secondary spot market, and bid-to-cover (btc) ratio:

8/24/2015            EU          1,459,000             €8.08     +0.00     btc 3.76
8/25/2015            EU          1,459,000             €8.22     +0.02      btc 3.46
8/27/2015            EU          1,459,000
8/28/2015            DE          1,599,000

By Mike Szabo – mike@carbon-pulse.com

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