VINACHEM

Carbon prices under the EU Emissions Trading System fell to three-month low this week due to soft compliance demand and lower interest from the power generation sector.

EU Allowances under the December 2023 contract were trading at Eur86.42/mtCO2e ($95.01/mtCO2e) at 0951 GMT on April 28, compared to a week ago when the contract settled at Eur89.72/mtCO2e on April 21, ICE data showed.

EUAs for December 2023 slumped to a three-month low of Eur85.64/mtCO2e April 26 but recovered to Eur86.73/mtCO2e on April 27, according to data from S&P Global Commodity Insights.

Bearish momentum was gathering pace on the EU carbon complex after a stable start to April.

EU ETS prices have fallen around 10% since early-April and compliance demand has pretty much been exhausted ahead of the April 30 allowances deadline.

Power generation buying interest was also declining amid a fall in gas and power prices, supporting coal to gas switching.

"The bearish fundamental driven demand is tempering upside from financial investor interest in the market, which has slowed in the past week despite Member States in the EU Council approving EU ETS revisions on April 25 – the final approval step before legislative changes can become effective," said S&P Global carbon analyst Michael Evans.

Weak compliance driven demand will support a bearish price outlook into the summer, according to analysts at S&P Global, as growing supply expectations under REPowerEU will temper financial investor interest.

Carbon prices under the EU Emissions Trading System fell to three-month low this week due to soft compliance demand and lower interest from the power generation sector.

EU Allowances under the December 2023 contract were trading at Eur86.42/mtCO2e ($95.01/mtCO2e) at 0951 GMT on April 28, compared to a week ago when the contract settled at Eur89.72/mtCO2e on April 21, ICE data showed.

EUAs for December 2023 slumped to a three-month low of Eur85.64/mtCO2e April 26 but recovered to Eur86.73/mtCO2e on April 27, according to data from S&P Global Commodity Insights.

Bearish momentum was gathering pace on the EU carbon complex after a stable start to April.  

EU ETS prices have fallen around 10% since early-April and compliance demand has pretty much been exhausted ahead of the April 30 allowances deadline.

Power generation buying interest was also declining amid a fall in gas and power prices, supporting coal to gas switching.

"The bearish fundamental driven demand is tempering upside from financial investor interest in the market, which has slowed in the past week despite Member States in the EU Council approving EU ETS revisions on April 25 – the final approval step before legislative changes can become effective," said S&P Global carbon analyst Michael Evans.

Weak compliance driven demand will support a bearish price outlook into the summer, according to analysts at S&P Global, as growing supply expectations under REPowerEU will temper financial investor interest. – Platts –