EUAs barely budged from Monday’s close as traders largely ignored the results of a German auction.
The benchmark December 2010 EUA contract was trading at €14.70 at 1215 London time on the European Climate Exchange (ECX), up 1 cent from its close on Monday as traders appeared to have little appetite to take major new positions.
The most liquid EUA contract opened at €14.65, rising to an intraday high of €14.75 before easing back slightly late in the morning.
The tight trading range follows on from a partial recovery in carbon prices on Monday, after the December 2010 EUA tumbled to a new 11-week low at €14.53.
“The German auction was 6 cents beneath the market (spot) price, which usually would be bearish for EUAs but it doesn’t appear to have had much impact,” said one trader.
The German auction of 870,000 spot EUAs cleared at a price of €14.62 on the European Energy Exchange, which hosts the sales on behalf of the government.
The trader added that market participants may be avoiding major trades until Thursday, when the UK will hold another auction of 4.4 million EUAs.
Volume was once again subdued after low volume on Monday, when many traders were absent because of public holidays across much of Europe.
Only 3 million EUAs had traded across all vintages on ECX by 12.30 GMT, even though many traders who were away on Monday had returned to their desks.
A lack of movement in energy prices also helped deter interest in the EUA market, with key energy contracts in crude oil, coal, natural gas and German power, moving by less than 1 per cent from Monday’s close.
In addition, some traders may be staying on the sidelines of the market until the European commission provides greater clarity on restrictions to the use of certain types of UN-backed offset credits in the third phase of the ETS from 2013.
“Many in the market now think it will be the middle of this month when the commission will announce its restrictions, and some might not be comfortable taking a position until then,” a second trader said.
In the secondary market for CER offsets, the December 2010 contract was valued at €12.44, up 1 cent from Monday’s settlement of €12.43.
Sceptre Group Limited is a specialist investment firm focused in low carbon financial investments such as sustainable biofuel plantations, agricultural farmland and green technologies. To learn more, visit our website: www.sceptreinternational.com