Global carbon markets are in a constant evolution. The market snapshot is produced monthly and provides a high-level overview of the key developments in select compliance and voluntary carbon markets.
*Please note: This snapshot is designed to provide a high-level overview of the key developments in compliance and voluntary carbon markets. Our in-market team produces daily and detailed updates and trade reports to CORE Markets software subscribers and clients. Contact us to find out more.
This month we cover key developments in the Australian, New Zealand and European carbon markets.
With the market likely catching its breath from previous periods of volatility, September was a much less volatile month for the ACCU market. Also, thinner trading conditions saw 39.5% lower volumes for the month compared to August.
The ACCU spot price opened the month at A$29.50, $1.50 lower than the closing level for August, then recovered across the first week, regaining the A$31.00 level by the 8th of September.
The price then remained largely stable, trading in a narrow band between A$30.50- A$31.50 before ultimately softening to A$30.35 to close September.
The HIR/Generic premium remained relatively stable across the month at circa A$4.00. However, volumes for HIR spot trades were significantly lower, at only 23% that of the generics contract volume.
September also saw the release of the Q2 Quarterly Carbon Market Report from the Clean Energy Regulator. The report included the following updates on ACCU holdings:
The upward momentum NZUs enjoyed across August initially maintained its trajectory for the first week of September, peaking at NZ$73.00 on the 8th spurred on by the third consecutive failed auction earlier in the week. However, by mid-month the momentum started to wane as traders began to take profits on earlier trades ahead of the NZ Government election looming in October. Prices softened quickly, to a low of NZ$64.00 by the 25th of September, recovering only slightly to close the month at NZ$66.05.
The EUA price started the month by continuing its downward trend, largely affected by the European gas prices softening after the initial panic caused by the news of the Australian LNG strikes subsided. The EUA auction calendar switched from summer to winter mode, meaning an increase in issuance volumes, contributing to the abundant supply in the market and, when paired with the persistently sluggish industrial demand, the bearish fundamentals outweighed any bullish signals.
By the end of the first week of September, the European December 2023 carbon futures prices hit their lowest level in three months at €80.23. Sharp price increases were then seen in the penultimate week of the month as the quarterly options expiry date triggered some buying interest. Additionally, the Commitment of Traders report indicated the increase in investment funds' net short positioning, giving an impression that there may be some future demand in order to unwind these positions. On the back of this news the December contract soared to €84.56 on 22nd of September, before the weak fundamental factors took hold again, with the contract closing September at €81.67.
The events outlined in this month’s update highlight the evolving nature of global carbon markets and the complexity of the net zero transition.
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