Sceptre International Group Limited – EUAs hit 8-week high

EUAs rose for the fourth day in a row, hitting an eight-week high of €14.94 on Tuesday afternoon.

The ICE ECX December 2011 bellwether contract last traded at €14.92 on ICE Futures Europe, a rise of 33 cents on Monday’s finish.

After opening at €14.61, the contract was offered down to a low of €14.49 within the first 85 minutes of trade.

However, consolidated buying on the exchanges saw prices climb to a six-week high of €14.77 by lunchtime. This was followed by a second buying surge that saw carbon hit €14.94 just before 1700 GMT, the highest trade since 2 December.

Two traders said the last four days of higher carbon prices were a direct result of the EU suspension of the spot market, because the cessation of spot trade bars the normal practice of banks buying spot from industrials and selling futures on the exchange as a hedge.

“There is no natural sell side,” one trader with a bank said.

“Today’s rise was mainly technically driven, with most of it triggered on exchange,” another trader at a major German utility said, adding that the price increase came as a surprise considering all other energy prices were down.

Liquidity was hugely improved, with around 24 million EU allowances changing hands across all contracts and platforms, making Tuesday the most liquid day for EUAs since 16 December.

Both German power and crude oil, which normally move in line with carbon, fell on Tuesday.

German base load power for 2012 on EEX fell for the 10th consecutive day, ending Tuesday at €50.84/MWh, down around 50 cents on Monday and nearly €4.00 compared with a six-month high of €54.60/MWh on 12 January.

The price direction of EUAs was replicated in the UN offset market, with CERs for December delivery ending the day at around €11.28, up around 23 cents from their finish on Monday.

However, Tuesday’s close in the CER market only represents a three-week high for the UN offset as heavy selling earlier in January saw the contract come under pressure.

The spread between the 2011 EUA and CER contract widened to €3.66 from €3.54 on Monday.


Sceptre Group Limited is a specialist investment firm focused in low carbon financial investments such as sustainable biofuel plantations, agricultural farmland and green technologies.

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