Isramart : Tough weeks ahead for EU carbon prices-analysts

Isramart news:
"There might be a bit of downside pressure, but it won't be anything like last year," said Trevor Sikorski, director of carbon research at Barclays Capital.

In early 2009, industrial firms like steel and cement manufacturers, which tend to receive more permits than needed to help them compete internationally, sold their EUAs on the spot market in a bid to raise badly needed cash and boost their balance sheets, a trend that pushed prices down to 8 euros from above 15 euros at the end of 2008.

Benchmark EUA futures CFI2Zc1 trading on the European Climate Exchange were up 1 percent on Monday after closing at 12.49 euros a tonne on Friday, a 6-week low. They last traded below 12 euros in April 2009.

"Even if selling is limited, I expect EUA prices could drop by another 1 to 1.5 euros in the next two weeks," said Emmanuel Fages of Societe Generale/orbeo.

BarCap's Sikorski was a bit more optimistic.

"The credit markets are a lot better for industrial companies now," Sikorski said, adding that he does not see EUA prices dropping below 12 euros.

"Recently when we've seen EUAs drop below 12.50 euros, utilities and financials come in and buy and industrials' desire to sell drops away because they're not as desperate for cash."