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Auction results bring market to pre-auction norm

November 27, 2017 by Abhilasha Fullonton

CaliforniaCarbon.info, November 27, 2017:

The California carbon allowances (CCA) prices remained at a standstill until auction results were released. CCA prices saw a 10 cent drop after the auction result were announced on Tuesday and remained at that level for the rest of the short holiday week. The current front (V17 Nov 17) and benchmark (V17 Dec 17), closed the week at USD 15.13 and USD 15.15, respectively indicating a return to price levels seen ahead of the November auction. Post-auction day activities went up with spreads of 1250 units on Dec17 and May18.

This weeks’ volumes traded were concentrated within three vintages. The total traded volumes saw a modest increase from 7,328,000 tons to 7,360,000 tons which is a 0.43% increase since last week. As usual, V2017 was the major contributor with 4,860,000 tons exchanged and accounted for 66.03% of total traded volume.  The second highest contributor this week is V2018 with 2,450,000 tons traded making up 33.29% of total weekly volume. Contributions from V2015 made up 0.68% while V2016, V2019 and V2020 showed no traded volumes.

Delivery-wise, majority of the trading was spread out between three months – Dec17 (4,787,000 tons), May 18 (1,250,000 tons), and Dec 19 (1,000,000 tons). These accounted for 65.04%, 16.98% and 13.59% of the total. Minor volumes were traded for Nov17 (23,000 tons) Mar18 and Dec18 (150,000 tons) which made up 0.31% and 2.04% of the total.

Open interest contracts saw an overall negative net change of 272,000 contracts. New contracts were seen on three deliveries– Nov17 (23,000), Dec18 (175,000) and Dec 19 (1,000,000). There was a reduction in OI contracts for Dec17 (1,420,000) and Mar18 (50,000). This might be because of the extension of the cap-and-trade program entities are setting themselves up for long-term trades because of market certainty.

While the Ontario carbon market saw no new trades last week, frequent price changes occurred in anticipation of the upcoming auction. Beginning of the week OCA gained 8 cents followed by a 26 cent drop mid-week. As of Friday (11/16) the OCA front and the benchmark prices now stand at CAD 19.19 and CAD 19.24, respectively.

 

Abhilasha Fullonton (abhilasha.fullonton@californiacarbon.info)

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