In last week’s report, we concluded that the Dec-18 EUA contract could spend the period up to contract expiry pricing in a 15.1-20.0 €/t range. While we admitted that is a wide range, we still did not really expect the market to trade the full width of that range in just one week. Prices started..
The EUA market had been testing the downside over the previous three weeks, without really breaking key support levels. However, the Dec-18 contract smashed through the 17.8 €/t support level on Monday and kept falling though the first four days of last week. After hitting a within-day low o..
The EUA market now seems just as poised to fall as previously it was to go up. Trading has been mostly rangebound since mid-August, with the last few weeks being more about the market being keen to test technical resistance to the downside than the upside. We still see some key technical resistan..
The super bull run that has dominated the carbon market has taken an extended breather over October, with the market as interested in testing technical lows as it is returning to its uptrend. If the three days of hyper volatility in early September are stripped out, the EUA market has now sat in..
A report published late Friday evening (19 October) by Carbon Pulse claimed that the record open interest (OI) on EU carbon allowance futures and options this year is misleading due to how one of the main exchanges, EEX, reports its volumes. EEX has been the exchange where the bulk of the increas..
The UK government released a paper late on Friday (12 October) which outlined what will happen in the event of a no-deal Brexit in March 2019. In essence, the announcement aligned with our expectations. Namely, UK installations will leave the EU ETS and this will happen immediately. UK installati..
The EUA market may have settled into a 20-22 €/t range over the last few weeks, but there has been a notable widening of the contango across the curve. The implied cost of carry for the Dec-18–Dec-20 spread has gone from 1.8% per annum (p.a.) at the start of September to 3.5% p.a. at F..
One development from late in the summer that has implications for Q4 18 price formation is the suspension of German EUA auctions from 14 November through to part of Q1 19, with a currently unknown specific return date. The suspension is to do with the renewal of EEX’s contract to be Ge..
The EUA super bull run of 2018 shows no signs of slowing down despite the odd high-volatility pricing event. Prices in late September were above 22 €/t, having started the year around 7 €/t. The high sustained carbon prices are supporting related markets, with TTF winter-delivery gas pr..
We had expected more pronounced market softness in the run-up to the expiry of Sep-18 EUA options on 19 September and forecast underlying EUAs to trade below 19 €/t given the balance in open interest between in-the-money calls and puts. The market traded just above the 20 €/t strike in..
Last week’s hyper volatility saw carbon close in a range between 18.9-25.2 €/t, with the first half of the week gapping upwards and the second half crashing back down. The upward trend coincided with a Financial Times article late the previous week (6 Sep) outlining how a raft of new p..
It was another surprisingly bullish week for EUAs. Market chatter focused on the longstanding-but-never-used rule that allows EU countries to introduce more supply into the EU ETS in the event of excessive upward price movement. The rule in question states that the European Commission is to conve..
EUA price increases in August, when primary supply was constrained, did not disappoint—the Dec-18 contract added 21% from the start to close of the month. The next few weeks should now see some downward moves from the over 21 €/t prices that have persisted over the last two weeks. We e..
Another four weeks of strong EUA price gains suggests that the proprietary longs still have an appetite for the trade. The drop in primary supply in August has helped. Power demand has provided some support for compliance buying, but strong hydro and solar generation in southern Europe has blunte..