More than 1.1 million CO2 permits and offsets traded in the Hubei ETS Wednesday, a record across all of China’s pilot markets, as emitters moved to ensure they can meet Friday’s compliance deadline.
In the busiest day since the market opened last year, some 565,000 Hubei Emission Allowances (HBEAs) traded on the local carbon exchange, the exchange said in a statement.
A further 131,000 HBEAs traded bilaterally and then cleared on the bourse. In addition, 442,000 CCERs traded at undisclosed prices.
Activity in the market has increased significantly in recent days after Hubei announced the July 10 compliance date following its postponement of the original May 31 true-up, and it became clear that a group of short cement plants was denied a request to borrow permits from next year’s allocation.
But the compliance rush has not had a bullish effect on prices. The allowances closed Wednesday at 25.07 yuan ($4.04), only slightly up from the previous day’s close of 24.90.
An update from the exchange showed that 13 companies handed over a total of 28.2 million allowances to the government for compliance on Wednesday, including a subsidiary of Huaxin Cement, one of the companies thought to be significantly short.
So far, 85 of the 138 firms covered by the Hubei ETS have complied, surrendering 166 million permits.
Since the Hubei market was launched, a total of 16.4 million HBEAs have traded on the exchange, at a value of 375 million yuan ($60 mln).
POST-COMPLIANCE BLUES
Meanwhile, the negative price trend continued in the markets that have finalised their 2014 compliance.
The Shenzhen 2014 contract fell 10% – the maximum allowed daily price movement – again on Wednesday, to close at 23.38 yuan, a fresh record low and 55.6% below the June 27 price.
Analysts say the main reason is that individual traders are exiting the Shenzhen market.
Beijing’s ETS also saw a 10% price drop Wednesday, with the price settling at 35 yuan, the lowest ever recorded in the capital’s market. The local exchange said nearly 400,000 CCERs traded.
The Shanghai market went untraded and closed unchanged at 16 yuan. Since emitters in the metropolis complied on June 30, just one permit has traded in the market.
By Stian Reklev – stian@carbon-pulse.com
