Isramart : UniCredit Revises Down Predictions for Carbon Sales in Europ

Isramart news:
ndustrial companies may sell fewer European Union carbon permits in the last months of 2009 than previously estimated amid signs that the continent’s economy is recovering, according to UniCredit SpA.

EU allowances for December may trade between 14 euros ($21) and 15 euros a metric ton through the end of 2009, driven mainly by commodity prices and weather conditions, said Nele Glienke, an analyst at UniCredit’s Carbon Solutions Team in Munich. The EU emission-trading system is the largest greenhouse-gas market.

“Carbon permits are becoming an asset that industrials want to keep,” Glienke said today in a phone interview. “There are signs that Germany is coming out of a recession and bets that production may rise in Europe, so companies know they may be short of permits at some point in the future and are wary of selling their CO2 allowances.”

Europe’s economy returned to growth in the third quarter after record-low interest rates and emergency stimulus measures helped combat the deepest slump since World War II, according to European Commission estimates. The euro-area economy may expand 0.7 percent next year and 1.5 percent in 2011 after contracting 4 percent this year, the EU’s executive said in its semi-annual economic forecasts on Nov. 3.

Germany, the region’s largest economy, may expand 1.2 percent next year and 1.7 percent in 2011, it forecast.

EU permits for December fell 2.2 percent to 14.06 euros a metric ton on Nov. 6 on London’s European Climate Exchange. They dropped 8 percent in the past two months, compared with a 10 percent loss in the same period of last year.

Fast Liquidity

“Last fall everyone wanted to get some liquidity fast, so we observed large selling by industrials,” Glienke said. “We had expected the same situation this year, but it looks like a lot of companies have already solved the short-term problems and they are not under pressure to sell now. So the likelihood and potential volume of such sales is decreasing.”

The permits may stay “relatively stable” until the end of this year, with traders focusing on the United Nations December climate summit in Copenhagen, Glienke forecast.

The UN will host almost 200 countries in Denmark’s capital, seeking an accord on greenhouse-gas emission reductions that would replace Kyoto Protocol, whose climate-protection provisions expire in 2012. Two years of talks have stalled as developing countries said they’re waiting for richer nations to cut their output first.