LONDON: European carbon prices were on course to end a three-day bull-run on Wednesday as traders sold permits shortly after prices broke above 5 euros for only the second time this year.
By 1605 GMT, the December 2014 EU Allowance was down 6 cents at 4.85 euros ($6.64). The benchmark carbon contract fell back from a morning peak of 5.04 euros, its highest since Dec. 30, which marked an 11-per cent gain from peak-to-trough since Friday.
"We've been on quite a run but I don't think people have enough confidence to support carbon above 5 euros so we saw some profit-taking today," said one trader.
Carbon had only briefly traded at 5.00 euros on the first trading day of 2014 as prices dipped amid thin volume. Traders said prices picked up as more traders returned from holiday and bought permits in expectation that a fast-tracked backloading plan to cut supply would push prices up this year.
"Backloading is definitely a driver, it represents a substantial cut to this year's auction supply," one said. Officials last week agreed to try to speed up the completion of the backloading process, which could mean as many as 400 million permits are withdrawn from scheduled sales of around 930 million this year.
A second trader said prices were unlikely to climb much above 5 euros before most countries allocate last year's share free carbon permits to industry. "People don't want to get caught out by a price drop triggered by industrial selling," he added.
Just under a quarter of the EU-wide industrial permit allocation has been handed out due to bureaucratic delays that followed a change in the process at the start of a new eight-year trading period.
On Wednesday, a government spokeswoman said Britain would distribute its 2014 allocation before March, raising the prospect that UK firms would receive two year's worth of the units before companies in other nations get their 2013 share.
indiatimes.com
By 1605 GMT, the December 2014 EU Allowance was down 6 cents at 4.85 euros ($6.64). The benchmark carbon contract fell back from a morning peak of 5.04 euros, its highest since Dec. 30, which marked an 11-per cent gain from peak-to-trough since Friday.
"We've been on quite a run but I don't think people have enough confidence to support carbon above 5 euros so we saw some profit-taking today," said one trader.
Carbon had only briefly traded at 5.00 euros on the first trading day of 2014 as prices dipped amid thin volume. Traders said prices picked up as more traders returned from holiday and bought permits in expectation that a fast-tracked backloading plan to cut supply would push prices up this year.
"Backloading is definitely a driver, it represents a substantial cut to this year's auction supply," one said. Officials last week agreed to try to speed up the completion of the backloading process, which could mean as many as 400 million permits are withdrawn from scheduled sales of around 930 million this year.
A second trader said prices were unlikely to climb much above 5 euros before most countries allocate last year's share free carbon permits to industry. "People don't want to get caught out by a price drop triggered by industrial selling," he added.
Just under a quarter of the EU-wide industrial permit allocation has been handed out due to bureaucratic delays that followed a change in the process at the start of a new eight-year trading period.
On Wednesday, a government spokeswoman said Britain would distribute its 2014 allocation before March, raising the prospect that UK firms would receive two year's worth of the units before companies in other nations get their 2013 share.
indiatimes.com
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