Weekly Market Update N°32: 7-11 August

Last week

The EUA contracts opened last week trading at €5.34 and traded between €5.27 and €5.38, before closing at the lower point of that narrow range. A volume of 3.6 million EUAs units were traded on the ICE exchange, far below the recent average of 9.8 million. The European auction cleared at €5.24 (4 cents below the secondary market). The auction had a strong cover ratio of 4.07, continuing last week’s trend of high demand for the reduced volumes offered in August.

On the next day, 08/08, the carbon market opened the session at €5.32 and then traded again in the tight range between €5.25 and €5.34. The trading session closed the day at €5.27, the same level where it also closed on Monday.  A modest volume of 4 million EUAs were. The daily EUA auction cleared at €5.26 (at exactly the same level as the secondary market). Again, the auction had a strong cover ratio of 3.89.

On Wednesday 09/08, the EUAs opened the session at €5.26 and traded for the first three hours with no real conviction, between the opening price and €5.30. Then the EUA auction (UK) cleared at €5.33, an impressive 4 cents above the secondary market. That strong result in the primary market led the carbon prices to rally to a level around €5.40, before ending the day at €5.37 (€0.10 up from Tuesday’s close).

On the next day, the EUAs opened the session on ICE at €5.39 and spent most of the day in a narrow corridor between €5.40 and €5.46, before dropping during the last two hours of trading, to €5.37/t, the same closing price as on the previous day.  The public auction cleared at €5.40/t (same level as the secondary market). Some 6.7 million EUAs were traded the ICE exchange, in line with most daily volumes since end of July.

On Friday, 11/08, carbon prices were little changed. In early trading hours the prices rose after receiving support from a positive energy sector. However, the carbon price was unable to break above the €5.47 level and lost its momentum to slip down and close the day at €5.39/t (up €0.02 from the previous close). Trading activity was limited with 5.9 million allowances changing hands on ICE.

Key news

Restart of the aviation auctions in September. After a 10-month break, 4.73 million aviation allowances will be sold in 6 auctions by the end of the year on behalf of 25 EU member states, Germany, Great Britain and Poland. The first one for 1.078 million EEUAs will take place on September 27 on EEX. This volume does not cover the aviation allowances from EEA-EFTA states such as Norway and Iceland. Around 1.3 million EEUAs will be sold from those countries at a later stage. The EEUAs auctions for 2017 were put on hold at the end of 2016 due to the ongoing discussions regarding the future of the aviation in EU ETS.

The first reduced-volume auction in August clear at a record 34-cent premium. The auction cleared at 5.60 euros and all the volume of 2.13 million EUAs went to one unidentified buyer, who entered two bids of 5.60 euros, thus securing the whole amount. The price was 6.3% higher than the secondary market price for DEC-17 at the time the bidding window closed. Thus, the auction became the first to be obtained by one single bidder. However, analysts commented that the purchase is a bad move from the buyer`s side and he is surely badly burned. 

Market Data

EUA DEC-17:

Date                      Open    High       Low       Last

31.07.2017          5.23       5.29       5.10       5.23

01.08.2017          5.25       5.38       5.21       5.30

02.08.2017          5.30       5.44       5.25       5.43

03.08.2017          5.41       5.45       5.37       5.43

04.08.2017          5.43       5.46       5.32       5.35

07.08.2017          5.34       5.38       5.27       5.27

08.08.2017          5.32       5.34       5.25       5.27

09.08.2017          5.26       5.41       5.26       5.37

10.08.2017          5.39       5.47       5.36       5.37

11.08.2017          5.37       5.46       5.34       5.39

 

EUA AUCTIONS:

Date                      Country               Price      Volume               Ratio

31.07.2017          EU                           5.23     4 261 500          3.30

01.08.2017          EU                          5.60       2 131 500          4.03

02.08.2017          PL                           5.29      2 428 500           3.41

03.08.2017          EU                          5.38      2 131 500           3.72

04.08.2017          DE                          5.33      2 236 500           3.46

07.08.2017          EU                          5.24       2 131 500           4.07

08.08.2017          EU                         5.26       2 131 500           3.89

09.08.2017          UK                       5.33       2 136 000             4.21

10.08.2017          EU                         5.40       2 131 500           3.74

11.08.2017          DE                         5.35       2 236 500            3.54