CARBON: New records – now targeting €100 following increased physical and financial demand
By Frank O. Brannvoll, Brannvoll ApS, Denmark
Before its expiry day, the EUA December 2021 contract reached a stunning EUR91.50 all-time high, less than 10 per cent from EUR100, a number only joked about three months ago.
An increased demand due to coal being by far the cheapest fossil fuel and speculators pouring in, as mentioned in previous reports, cut through resistance points at EUR75 and EUR80. Speculators have been looking towards EUR80-100 and a 10 per cent profit taking took place the day after the all-time high.
EUA front-year contract, November 2019-January 2022
The price is still supported by proposals to reform the EU trading scheme, including the following key measures:
• rebasing of the cap, increasing the linear reduction factor, reducing EUAs and aiming to phase out free EUA allocations
• setting up a Carbon Border Adjustment Mechanism (CBAM).
The December 21 contract saw a considerable increase of 41 per cent to EUR84.50, setting uncharted territory – a wide volatile range of EUR75-100 as the end of the year approaches. Upside resistance is at EUR92 and EUR100. Support is found at EUR80 and EUR75, and major at EUR69, the former top.
The long-term trend is still moving upwards, but surprisingly fast and EUR50 remains the key support.
Brannvoll ApS forecasts for 2022 a trading range of EUR50-75 and an average price of EUR68. This is now being revised up given the price action to EUR65-100, with an average of EUR80.
Published under Cement News