Largest fall ever as financial players liquidate positions, or are forced to close – return to compliance levels

Largest fall ever as financial players liquidate positions, or are forced to close – return to compliance levels
24 March 2022


By Frank O. Brannvoll, Brannvoll ApS, Denmark

After reaching EUR98.50, the EUA Dec 22 has fallen to EUR68, representing a 30 per cent drop. This came in reaction to the Russian invasion of Ukraine and the turbulence in all financial markets.

As discussed last issue, financial players were taking profit and new margin calls from losses in other markets sent the EUA in a sell mode.

Furthermore, rumours indicate that several large Russian trading companies sold EUAs to get cash, having very large speculative positions.

The EUA fell as low as EUR55, or 20 per cent below the current level. This level attracted normal compliance buyers as more coal and gas may still be seen, after the first fear of a cut-off from Russian gas disappeared.

EUA front-year contract, July 2018-December 2020

The market will still be driven by political news and how the energy mix looks in the short term in Europe. Nuclear power in Germany will almost certainly be prolonged and even reopened to reduce exposure to Russian gas, and it is not expected that  Nord Stream 2 will be started. This could decrease some demand for EUAs.

The expected range is between EUR60-80 while support is at EUR60 and resistance seen at EUR75 and EUR80.

Brannvoll ApS forecasts for 2022 a trading range of EUR65-100, with an average of EUR80. To be revised if the EUR100 barrier is broken. 

Published under Cement News

Tagged Under: carbon market carbon trading