Market Development
• Last week the price rose 11c in another subdued week for EUA carbon trading
• Tight 20c trading range for the week
• Clean dark spreads experience big falls on Tuesday as EUR/USD reverses recent gains.
• Power prices gain as warmer weather forecast
Auction Overview
• 12.887Mt comes to market in 5 auctions (11.952Mt EUA and 0.935Mt EUAA)
• July brings 63.024Mt in auction volume before August holiday slow down
Price Action
Prices rose 11c last week (1.48%) in the face of plentiful supply, a weakening EUR/USD rate and storm clouds looming over a potential Grexit. EUA carbon trading volumes and the weekly range were again subdued last week with most days barely managing a 10c price range. The clean dark spreads experienced big falls on Tuesday as the EUR/USD reversed its recent trend and made EUR denominated coal more expensive. Despite this carbon prices held firm suggesting some decent underlying demand and possibly some speculation purchasing ahead of the MSR sign off in the EU plenary on 6th July. Power prices also helped carbon to stay strong as warm weather bought price rises. The week ended with a push towards the recent resistance level of €7.64, however, once again there was some sizeable selling interest around that level and the market came back off from its intraday high of €7.63 suggesting any potential break to the upside will meet strong resistance. Price Impact: with carbon prices having ended the week higher in the face of strong headwinds it remains to be seen which way we break out of the current sideways trend. A push higher last week would suggest strong underlying demand, however, the resistance level of €7.64 also looks to be a sizeable hurdle. With Grexit storm clouds growing by the day there is possibly a return to volatility on the horizon.
The week ahead
The Greek crisis is likely to limit any upside in the market as the turmoil looms. However, as seen in the Grexit Special, the downside is also expected to be limited so a continuation of the sideways EUA carbon trading movement is likely.
