The Carbon Market 31.03.2020

Prices increased

The EUA Dec-20 price closed at €17.06 on Monday, 30.03.2020 (+4.09% than Friday, 27.03.2020).

EUA Dec-20 increased by €0.28 last week and closed at €16.39 (+1.74%). Traded volumes decreased significantly compared to the previous week with 167.6Mt versus 278.2Mt exchanging hands on ICE across contracts. The total Open Interest increased by 16.1Mt 22.00 for a total of 889.8Mt.

No delay of the surrender deadline

Although the EU Commission announced on Thursday, 26.03.2020 that there will not be any postponement of the CO2 compliance deadline of the EU ETS installations, which remains on 30 April 2020, our forecast is bearish on this week due to weak market fundamentals and the spread of COVID-19.

Source: The European Commission, Brussels & ClearBlueMarkets, London

The CO2 Market 24.03.2020

Last week, EUA prices witnessed a historic weekly crash of 27% and closed at a year and a half low of €15.54 on Monday, 23.03.2020.

Since the week prior, quarantine measures, travel restrictions, and business closures have significantly increased across the EU and will likely remain over the coming weeks at least. This has spurred fear of significant emission reductions to come in the EU market, causing the selling pressure to aggressively increase far beyond what the market buyers could handle.

EU states, UK hand out a further 8.5 mln free EUAs for 2020

EU member states and the UK handed out a further 8.5 million free carbon allowances to industrial emitters over the past two weeks, according to updated data released late Friday, 20.03, by the European Commission.

Germany indicates leniency in EU ETS compliance deadlines due to COVID-19 crisis

Germany will take into account instances where EU ETS compliance deadlines have not been met as a result of the coronavirus outbreak and could grant clemency in some cases, the government announced on Friday, 20.03.

Poland to push for emergency EU ETS changes if virus impact persists

Poland may propose emergency EU reforms including ETS changes, the country’s climate ministry told Polish state media on Thursday, 19.03, aiming to reduce the burden on its economy as it comes under intense strain due to the Coronavirus.

Source: Carbon Pulse and ClearNewMarkets, London

The CO2 Market 09.03.2020

News Update

Lombardy in quarantine  because of Corona virus and the state of New York asked for emergency. All commodities markets collapsed this morning at opening.

The carbon market collapsed to 22,37 Euro/EUA early in Monday morning, but went a little bit upper to 22,65 at mid-day. Last week prices also had a volatility between 23.24 – 24.04 Euro/EUA.

Markets Comment

All major markets in Asia moved higher on Thursday. In another milestone for China’s recovery, the yuan on Wednesday rose to 6.91 against the US dollar. While the spread of the virus continues to accelerate outside China, domestic outbreaks appear to have slowed significantly since mid-February. The resumption of work has returned as well as the movement of workers to some major cities and carbon consumption now returning to more than 70% of last year’s levels. The main assumption is that the virus in China will stop at the end of the first half. The huge volatility of markets and commodities has even led the Carlyle Group to delay Atotech’s IPO.

This is not the first time, however, that we have observed disruptions and events that are hindering global growth, but this is not necessarily bad, as there are arising significant opportunities.

Technical Analysis

We see the reaction after the announcement of interest rate cut in the US by 0,50% that showed how much it is affected by the liquidity flowing into the system and in conjunction with the compliance period. Area 23-23.3 is particularly important and only a significant deterioration in global growth  could possibly lead to break it. Technically most formations pointing lower, but that still has to be proven. Until then it remains trapped between 23-25.89 range and the 23-23.3 area looks attractive for buying.

Source: AitherCO2, London