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END OF DAY – Carbon rises 4% to exceed EUR 17/t

GasCoalCO2Power

19 Jul 2018 14:52

Frankfurt

19 Jul 2018 14:52

(Montel) European emissions prices rose nearly 4% on Thursday trading, trading above EUR 17/t mark for the first time in seven years, largely due to utility buying.

The EUA Dec 2018 last traded EUR 0.39 higher at EUR 16.80/t, but hit an intraday high of EUR 17.06/t earlier in the day on Ice.

“We have seen quite high auctions and fundamentals are still tight for EUAs at the moment,” one trader said, while others noted prices moved higher on utilities hedging ahead of the August reduction in carbon credits.

“Still, the continued strong gains are a surprise to the market,” the traded added, noting that EUAs have gained more than EUR 1/t over the past ten days.

Others said they were unsure whether high German power prices were driving carbon or vice versa.

German power for next-day delivery rose to a 2018-high amid hot and dry weather, while the Cal 19 contract traded above EUR 45/MWh, close to a five-year high.

Weaker coal
On the coal market, prices fell in late trading, following gains on Wednesday.

The year-ahead coal contract in the API2 window last traded USD 89.24/t, down USD 0.24 day-on-day. The contract gained USD 2.74 on Wednesday, its largest since January 2017.

“The downside in the coal market is likely to be short lived though as the Asian coal market is still short, due to the heat in Japan, South Korea and China,” the trader said, expecting the Cal 19 contract to rise above USD 90.25/t, the highest prices the contract saw on Thursday in early trade.

European gas prices also rose on strong demand for the fuel in the power sector amid a lack of wind.

On the British NBP hub, day-ahead gas was last seen trading 0.30p higher at 58.80p/th, while the front-month was 0.40p higher at 58.15p/th.

In the UK, gas plants accounted for 58% of the country’s power output, compared with 55% over the past 24 hours, data from TSO National Grid showed. Wind power output only accounted for 1.9% and coal for 3%.

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