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API-2 outlook stable but carbon will drop

World Coal,

Thomson Reuters Point Carbon has released this week’s Cross Commodity Report.

Following last week’s trend, the API-2 front year contract continued to move down amid heavy selling pressure and surrounding bearishness in commodity and equity markets early in the week as the US budget crisis dragged on. Increasing exports from South Africa into Europe after the summer also weighed on prices.

The strong downward trend in the API-2 Cal-14 contract suggests that a test of potential support at US$ 80/t is in the cards. However, technical indicators are flagging oversold conditions after the recent falls. Thomson Reuters Point Carbon expects a “breather week” with a neutral outlook.

Carbon prices retreated last week on a higher supply outlook as the European Investment Bank announced it will sell 100 million allowances over the course of five months, starting in mid-November – earlier than previously expected.

Thomson Reuters Point Carbon expects the downward trend to remain intact with prices testing the Euro 4.38/t level.

Adapted from press release by Jonathan Rowland

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