Friday spotlight: EUAs wobble near €5/tCO2e, then rise on upcoming supply cut

11 April 2014 13:06 Source:ICIS
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EU allowance (EUA) prices hovered just under – or at – €5.0/tonne of CO2 equivalent (tCO2e) at the close for much of 3-10 April.

Only at the end of the week did the December ’14 contract punch through to close at €5.15/tCO2e on Thursday, near the upper limit of technical levels. The product was supported by anticipation of supply being limited as the impending end of the NER300 clean energy fund EUA sale nears.

The benchmark product started the period lower, at €4.90/tCO2e, however. Europe’s carbon market was still reeling from the bearish news that 2013 like-for-like verified EU emissions figures were down on 2012.

Downward pressure was exerted during the week as the market continued to consolidate the slide in prices since the start of March as speculators sold off their positions following the start of regulations tightening auction supply, known as ‘back-loading’.

The December ’14 contract hit a closing low for the week of €4.70/tCO2e on 4 April.

The strongest day-on-day gain was on 7 April when prices rose €0.30/tCO2e, with the benchmark product closing at €5.0/tCO2e. Prices firmed because of a stronger-than-usual auction result and bullish power prices.

The EU announced on Wednesday that four countries were given approval to hand out free 2013 allowances to utilities within their borders, which added a little bearish pressure that morning.

The European Parliament on 3 April voted to continue exempting intercontinental flights from inclusion in the EU emissions trading system until at least 2017. This decision had no impact on prices, however, as the verdict was expected and priced in by traders. Ben Lee

By Ben Lee