CO2 breaches EUR 19/t to hit 15-month low

20 March 2020 | Trading

European carbon prices tumbled below EUR 19/t on Tuesday – hitting a 15-month low – after the EEX cancelled its daily auction of EUAs amid a lack of bids.

The Dec 20 EUA contract last traded 4.8% lower at EUR 18.53/t on Ice Futures but earlier hit EUR 18.20/t, the lowest intraday level since 6 December 2018.

Total volume in the front-year contract on the London-based bourse had reached more than 23m EUAs as of 12:30 CET.

“Total bidding volume has fallen short of auction volume,” the EEX said in a message to traders. “[The] auction [is] cancelled as provided for in the EU auctioning regulation.

The auction offered 2.7m EUAs. This volume will now be spread across the next four scheduled sales.

Before the auction prices held close to EUR 19/t after plunging by more than 11% on Monday. Traders said EUAs were tracking developments in wider markets amid the ongoing pandemic.

Continuing sell-off

“The sell-off continues on deepening worries of coronavirus curbing economic activities and EUA demand,” said Yan Qin of Refinitiv. 

“With most EU counties implementing lockdown measures including home office, trading activities and risk appetite are also affected.”

On Wednesday, the UK will hold its second auction after its suspension from sales was lifted, with 5.7m EUAs to be offered.

“Under current circumstances, it will be even more challenging for the UK auction tomorrow,” Qin said. 

“The breaching of key support at EUR 18.83/t is opening further downside to EUR 17.23/t."

Meanwhile, Switzerland’s most recent allowance auction, which took place on 9-11 March, failed to clear “because the clearing price differed significantly from the relevant price on the secondary market in the EU", the country’s emissions trading regulator said on its website.

The country has also cancelled its next sale, scheduled for 23-25 March, and would also shut the Swiss emissions trading registry from midday Wednesday until “at least the end of April 2020”, the regulator said..

Source: Montel