US: CCA volume dips, prices stay flat

Dan X. Mcgraw

18-Apr-2014

California carbon allowance (CCAs) declined slightly this week as traded volumes dipped on the heels of hitting the highest annual volume the previous week, traders said.

The value of CCAs traded or cleared on the InterContinental Exchange (ICE) dropped to 1.7m, down from the 5.4m traded last week. Prices for the Dec ‘14 Vintage 2013 contract settled at $11.94/tonne of CO2 equivalent (tCO2e) (€8.6/tCO2e), or a decline of $0.06/tCO2 week on week, according to ICE data.

Most of the activity came Wednesday as 1.5m allowances were shifted from a Dec ‘15 Vintage 2016 contract to a June ‘16 Vintage 2015 contract for $12.53/tCO2e, or a $0.25/tCO2e premium over the Vintage 2016 contract. Traders said the trade was likely a future compliance entity shifting its carbon position.

A majority of the remaining volume traded this week centred on the current vintages – Dec ‘14 Vintage 2013 and April ‘14 Vintage 2014. Those contracts changed hands for $11.94/tCO2e and $11.75/tCO2e respectively.

Last week’s volume was the highest total volume traded this year, and traders said it was sparked in part by news that the Senate President Pro Tempore Darrell Steinberg would drop a proposed carbon tax that would have applied to the fuel sector and removed them from the cap-and-trade programme ( see EDCM 15 April 2014 ).

Traders said the traded volume drop was not another bearish signal, but a return to previous liquidity levels in the California market.

“This just looks like more of the same,” said a trader from a trading house.

Carbon traders said activity could pick up in the coming months as fuel suppliers get more active in the market ahead of their inclusion in 2015. One trader said the Steinberg news could push the fuel sector to become active sooner rather than later.

The Air Resources Board, the governing body of the state’s cap-and-trade programme, will hold its second auction on 16 May. Market participants will be able to purchase 16.9m current and 9.3m future vintages. Dan X. McGraw

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?