isramart Analysis: Carbon slides to 7-week low

Carbon prices fell 4.6 per cent on Monday, as softer energy markets sparked a technical selloff.

By 17.30 CET, the EUA contract for December delivery was valued at €13.37, down 4.6 per cent from its closing price in the cleared brokered market on Friday.

It was the contract’s lowest finish since 23 April, when the 2009 EUA ended in the brokered market at €13.30.

“The market collapsed today,” said a carbon trader at a European bank. “There certainly wasn’t any support from the energy complex,” he said, pointing out lower prices in Brent crude oil, German power, UK natural gas and European coal.

He said there was active selling by financial institutions when the December 2009 EUA broke through technical support at €13.50.

Longer-dated CO2 allowances also plummeted in today, with the 2012 EUA valued €2.09 above the 2009 vintage.

That price spread was €2.22 by the end of trading on Friday.

In key energy markets, Brent crude for July delivery was last trading at $68.02/bbl, down 0.5 per cent from the previous session’s close on the Intercontinental Exchange (ICE).

Earlier today, front-month crude was trading as low as $66.88/bbl.

German power’s 2010 baseload contract, which generally moves in line with carbon, ended nearly 1.0 per cent lower on the day at €52.85/MWh on the European Energy Exchange.

Overall trading volume in EUAs reached some 19 million allowances, compared with last week’s daily average of nearly 25 million.

Trading turnover in EUAs was largely curbed by the temporary closure of Paris-based Bluenext’s spot market.

Bluenext halted trading to allow its French-based members adjust their systems to a new French government decision to exempt spot carbon allowances from value-added tax.

Spot trading on Bluenext will resume at 08.00 CET on Wednesday.

In UN-backed CERs, the December 2009 delivery was valued at €11.45 by the end of trading, down 4.6 per cent from the closing level in the brokered market on Friday.