Thomson Reuters Point Carbon: Cross Commodity Scorecard

Thomson Reuters Point Carbon has released its latest cross-commodity scorecard, with coal prices dipping once again and carbon prices remaining flat.

Coal

After a flat start to last week the API2 Cal’14 contract went higher from Wednesday, carried by doubts on whether the European market would tighten if Drummond loads were absent in Q1 2014. The frontyear contract was pushed above the US$ 84/t level with additional support from a higher euro-dollar exchange rate, despite weaker German power prices. Friday’s session resulted in a small correction.

Despite the absence of news from Colombia regarding the possibility of a cut in exports from 1 January 2014, it is believed that European utilities have already found replacement cargoes from other Colombian producers, as well as other coal origins. However, uncertainty over Drummond’s situation continues. Given the recent rally, Thomson Reuters Point Carbon expect some profit taking this week.

Carbon

Last week, EUA carbon prices rose early in the week, as the EU parliament approved the legal clarification of the proposed backloading plan. Gains were limited, as the positive outcome was largely expected by the market. Prices then retreated on Wednesday after EU member states representatives expressed support for a delayed start of backloading in 2014, and held steady amid the prospect of the proposal being finally approved in the coming week.

The Agriculture and Fisheries council will likely formally adopt the backloading proposal at its meeting on 16 – 17 December. This, as well as lower auction volumes, would provide some support to prices. However, Thomson Reuters Point Carbon expects prices to end the week at current levels, as the rubber stamping is prices in and profit-taking could lead to some downward correction.

Adapted from press release by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/16122013/coal_and_carbon_prices_360/