European carbon prices dipped on profit-taking on Tuesday after hitting a fresh two-and-a-half year high earlier in the session.
The Dec-15 EUA futures ended the day down 2 cents at €7.97 after opening at €8.06 and touching an intraday peak of €8.07 in the first minute of trade.
That was the loftiest level seen on the front-month contract on ICE Futures Europe since Nov. 2012, extending Monday’s €8.01 high.
Prices then fell as low as €7.92 before climbing back towards the end of the day.
“Some were happy to sell through €8, so that put the brakes on temporarily,” one trader said.
Another added that the market was due a breather following yesterday’s and this morning’s gains, which together saw the Dec-15 EUAs rise by as much as 4.1% over Friday’s €7.75 settlement.
“Hopefully the market’s now consolidating in a new trading range above €7.90,” he added, referring to the previous high for 2015 which was hit back in February.
Some 12.3 million units changed hands on the Dec-15s on ICE, with a further 6 million allowances traded along the rest of the curve including the daily futures.
Market participants said some buying appeared to be coming from utilities doing last-minute hedging before some traders go on holiday and ahead of lower EUA auction volumes next month, while selling pressures were emanating mainly from speculators.
EUAs were also supported by a firmer euro on Tuesday, which more than offset higher coal prices.
With German baseload power prices relatively flat, that meant the country’s calendar-year clean dark spreads gained around 4% each, climbing back towards last week’s highs.
Meanwhile, a group of 25 EU nations earlier in the day sold 2.918 million spot EUAs for €7.92 each, in an auction that cleared 2 cents below market and attracted bids worth a total 6.3 million units.
The UK will sell 3.123 million spot allowances on Wednesday.
EU governments are due to auction off a further 24 million EUAs in July – the busiest month on the 2015 sales calendar – before quotas drop by more than half to 27 million in August.
By Mike Szabo – mike@carbon-pulse.com
