European CO2 prices dip under Eur15.00 on waning demand

London (Platts)--7Jun2006

EU emissions Allowance prices dipped below Eur15.00 in mid-morning
trade Wednesday as the market gave way to a combination of poor demand and
weakening German power prices, sources reported.
EUAs for December 2006 delivery were priced at Eur14.65-14.85 at
around 1030 London time (0930 GMT), down from Tuesday's closing level of
Eur15.675. Market sources noted that German calendar 2007 power was down some
Eur0.65/MWh at the same time.
EUA prices have been drifting since May 23, when they reached a
short-term peak of Eur19.45 in the wake of the publication of 2005 verified
emissions data from most of the 11,500 plants covered by the EU Emissions
Trading Scheme.
2006 prices had collapsed from a record high of Eur30.475 on April 19
to a one-year low of Eur9.25 as data leaked to the market showed Europe
emitting less CO2 than expected in 2005.
After the data was officially published and showed Europe emitting some
64 million mt less than its limit for the year, prices began to recover on a
combination of bullish longer-term sentiment and utility buying to cover
forward power sales.
The latest weakness reflects an erosion in demand from the utilities
as well as a lack of participation from speculative traders. Sources reported
Tuesday that there had been considerable market support from utilities at
Eur16.00, but that the volume of selling had simply been too heavy.

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