Spot NZUs closed at NZ$6.57 ($4.16) on Friday, down 2% on last week, as they hit their lowest levels since mid-June amid waning interest from traders.

The spot contract closed as low as NZ$6.55 on Wednesday but ended the week 2 cents above that amid almost no demand and only small clips on the offer.

“The pendulum has swung with the market feeling softer than it has for some time,” said brokers OM Financial. “Our market’s underperformance is mostly attributable to a lack of liquidity more than anything.”

It’s only been ten months since NZUs were lingering in the NZ$4s, but the momentum provided by the cut-off of UN offsets has disappeared, primarily due to lack of policy direction.

Traders still await news from the government on what the upcoming ETS review might bring, and given the short-term over supply in the market, few buyers are willing to push the price up until they get an indication on whether the review might lead to tighter supply in the future.

By Stian Reklev – stian@carbon-pulse.com

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