Carbon Match Weekly Summary on NZETS and further afield

Carbon prices have had a good old run at it over the last ten days, posting gains for 9 consecutive days before profit taking saw the market settle back overnight on Wednesday.  Spot CERs closed at $6.12.

A leaked version of a draft document which is expected to be tabled by the Commission in late July / early August was the main cause for excitement; we are talking in particular about the proposal to “backload” between 400 million and 1.2 billion credits, which according to analysis by Barcap could see 2013 EUA prices double to around the €16 mark, presumably dragging up CER prices dramatically with them, and a far cry from the current forward prices we are seeing for NZUs (2014 delivery offered at $7.50).

Having said that, it’s been another quiet week domestically.  We’re seeing increased interest in swaps but appetite for NZUs remains very low and we are a long way from compliance year end.

While the intent to intervene in the Eu carbon market is clear, we are obviously far from out of the woods.  Markets are likely to quieten down as the northern hemisphere approaches the sleepy summer holiday season and while Greece has a new Government that’s no guarantee of its survival in the euro zone.


One Response to Carbon Match Weekly Summary on NZETS and further afield

  1. Geoff Manks says:

    The uncertainty and probable volatility of the NZU pricing over the next 6 months means ETS participants need to be mindful of the impact to their insurance programmes, namely; A – the surrender liability sum insured; B – the insured value for loss of future earnings. If the EU Commission do restrict the flow of credits, and the consequence is a jump in the NZU value, there will be an affect to the risk exposure of ETS forest owners. So the good news of any increase in NZU value should be considered in light of the impact.

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