EU carbon prices jumped after a government auction cleared well above market for the second consecutive session but slipped back in afternoon trade.
The benchmark Dec-15s eventually settled at €8.17, a 2-cent gain on Wednesday’s settlement on healthy turnover of 11 million, though volume was less than a third of Wednesday’s bumper dealing.
The EU sold 2.9 million spot EUAs on EEX at €8.20, three cents higher than where the secondary prompt market was trading when the bidding window closed at 0900 GMT. Though at 2.9 the bid-to-cover ratio was slightly below the 3.1 year-to-date average.
The Dec-15s climbed from €8.19 up to €8.25 in the minutes after the auction result was published, notching a nine-day peak.
The front-year futures by more than 1% shortly after Wednesday’s UK auction cleared 4 cents above the prompt market, in what was the largest premium recorded in a government auction so far this year.
Government sales usually clear a few cents below secondary market levels.
Carbon got a bullish signal from the energy complex on Thursday as German clean dark spreads nudged higher along the curve due to falling coal prices.
The year-ahead ARA coal contract dropped 34 cents to $48.15 a tonne on ICE.
Meanwhile, the far less liquid Dec-15 CERs gained 4 cents to settle at €0.53 on ICE, their highest for six months, though most of the 187,000 turnover was spread trades linked to the Dec-16s and 17s.
The benchmark CER contract has climbed steadily and gained some 50% since mid-June, when prices were at €0.36.
“We have seen a tightness in (CER) supply for a while now, as CDM projects are not issuing at the current price and lots (of developers) we speak to are (looking at the) Chinese ETS,” one trader said.
The UN has developed rules to let developers leave the CDM, but most market participants are doubtful of their chances to be approved in the Chinese market, although some have decided to give it a try.
By Ben Garside – firstname.lastname@example.org