EU carbon prices were little changed on Thursday as traders said signs of heavy utility buying provided support as a stronger euro helped boost their profit margins.
The benchmark Dec-15 EUA contract closed one cent up at €8.29 on ICE, near the middle of the day’s €8.23-€8.35 range.
Some 17 million units changed hands, with over 10 million in block trades. A further 10 million units went through as block trades on the March 2016 contract, which traders said was likely a large utility rolling forward a position.
“It looks like utilities are doing a good amount of hedging, which is remarkable when you consider that the market is fairly flat,” said one trader.
Another 2.5 million EUAs were transacted on the ICE futures for delivery between Dec. 2016 and Dec. 2018.
“It may be that we’ve stalled and prices won’t shift much from here for a while,” he added.
The energy complex was favourable for utilities to hedge their electricity sales, as the 2017 German clean dark spread climbed to its highest for three weeks.
This was mainly because the euro strengthened against the dollar, as mixed US economic data added to doubts over whether the Fed would raise interest rates next week.
The EU’s auction of 2.9 million spot EUAs cleared one cent below the secondary spot market, with a bid-to-cover ratio of 2.24, the lowest for an EU sale since July 21.
This week’s scheduled auctions, clearing prices, distance to secondary spot EUA market, and bid-to-cover ratios:
07/09/2015 EU 2,918,000 €8.02 +€0.01 2.85
08/09/2015 EU 2.918,000 €8.09 +€0.01 2.47
09/09/2015 EU 935,000 EUAAs €7.94 -€0.25 5.01
10/09/2015 EU 2,918,000 €8.25 -€0.01 2.24
11/09/2015 DE 3,198,000
By Ben Garside – firstname.lastname@example.org