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Issue CCII

Carbon Newsletter

DBLM Solutions
17 Aug 2015

The EUA Dec14 contract is currently at 8.25. It


is now about a month since I showed my hand,
declaring carbon in a new range, roughly from 8
to 9. The last three weeks the price looked to press
below the 8 mark, without success.The price is
currently at first resistence, with second at 8.35.
Analysts call for bullish short term forecasts.
Volumes remain at levels which suggest the
European utility giants, RWE, EON, Drax, Dong &
Fortum still have not engaged in the level of carbon
hedging that we have witnessed in earlier years.
The Industrial sectors carbon activity in the first
half of 2015 is predicted to have little effect on
carbon prices in the short term.
ICE
EUA
Spot

ICE CER
Spot

10/09/2015

8.26

11/09/2015

Weekly
Recap

ICE
EUA
Dec15

ICE CER
Dec15

0.50

8.29

0.50

8.21

0.52

8.27

0.52

14/08/2015

8.23

0.50

8.24

0.49

15/09/2015

8.22

0.51

8.18

0.50

16/09/2015

8.22

0.51

8.23

0.50

Volumes lots

2,516

54

55,272

1,620

-0.48%

2.0%

-0.72%

Week %

The cement sector increased its carbon trading


activities by 130% or +4million tonnes year on
year and sold around 8.9 million tonnes compared
to 3.8 m tonnes for the same period last year. The

covered companies generated revenues of 63.5m,


representing an increase of 42.8m in carbon
selling profits compared to 20.7m in H1 2014.
Currently four out of seven of the mega European
cement companies track in detail disclosed
information regarding carbon selling activities in
their biannual financial report. It is no secret that
the cement sector have and have had huge surpluss
over the last few years due to the economic crisis.
For instance, Italcementi increased its carbon
related profits from 11.5m to 38.4m, this
translates in 5.3m allowances sold in H1 2015
(2.2m allowances in H1 2014). Expect a radical
haircut on their free allowances post 2020 as the
cement Industry are gifted this windfall for a
decade now.
Be aware this week that the German Clean Dark
spread (-0.35%)is marginally bearish on the carbon
price. The clean dark spread gives the generation
margin of a coal fired power plant(taking into
accountcarbon costs) in MWh.
The EUA/CER spread widened this week to 7.71,
at close of business last night versus the 7.75
spread we witnessed last week and 7.58 the week
before.

Auctions
EEX held auctions last Thursday, Friday & Mon.
Auction prices were 8.25, 8.22, 8.21 & 8.17
respectively. The cover ratios for the above
auctions were 2.24, 2.35, 2.68 & 2.82 respectively.

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits.
Contact: David Boles, Compliance Markets -Direct: +3531 4433 584; Mob: +353 831747707
DBLM Solutions is partly funded by the Wicklow Enterprise Board.

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