EU Market: EUAs tick lower on thin trade as bigger auctions await

Published 17:44 on August 31, 2015  /  Last updated at 15:16 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

EU carbon prices slipped towards €8 on Monday in very thin trade hampered by a UK public holiday and the lack of a government auction.

EU carbon prices slipped towards €8 on Monday in very thin trade hampered by a UK public holiday and the lack of a government auction.

The Dec-15 EUA contract ended down 4 cents at €8.08 on ICE, near the bottom of the day’s €8.04-€8.16 range on volume of less than 3 million units.

No auction was held today but governments are set to double the amount they offer from tomorrow, following a month of curtailed volume to account for the lack of summer demand.

Sales will rise to 12.16 million units this week, double last week’s volume, but analysts were divided over whether this would affect prices.

Bernadette Papp of brokers Vertis said in a weekly blog post that the increased auction supply might have a “major price impact” in September, along with the start of talks in Brussels on the Commission’s post-2020 ETS reforms.

She pegged resistance at two Fibonacci technical levels of €8.17 and €8.27 and said the first support would be at €8 followed by the 50 day moving average of €7.88 and the August low of €7.76.

Analysts at Thomson Reuters Point Carbon were more bullish.

“This week’s rise in auctioning supply is, in our view, largely priced in, as indicated by last week’s bearishness, which provided an overdue correction, opening the door to another upward move,” they said in a weekly note.

Carbon lost 1.1% last week as traders were rattled by falls in wider energy and equity markets, prompted by fears about the strength of China’s economy.

Weaker carbon, coal and a euro combined to slash 10-17% off German dark spreads last week, damping the incentive for utilities to buy carbon.

The spreads were slightly higher on Monday as a stronger euro made dollar-denominated coal cheaper for European utilities to import.

Below are this week’s scheduled sales:

01/09/2015          EU          2,918,000
02/09/2015          UK          3,123,000
03/09/2015          EU          2,918,000
04/09/2015          DE          3,198,000

By Ben Garside – ben@carbon-pulse.com

Comment