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CCA price fall hints at lower auction clearing prices

August 7, 2017 by Ronjoy Bezbarua

Heavy losses were felt on the CCA market this week with prices falling by USD 0.28 from the previous week’s close. Thursday felt the brunt of the week’s price slump, dropping USD 0.25 on the current front contract before regaining on Friday to close the week at USD 14.80. The price dive may be seen as somewhat of a reality check for the WCI market with recent prices hovering closer to 2019’s expected price floor than the present. With next week’s auction looming, however, the selling pressure observed over the past week would suggest an auction clearing price much lower than the positive prices seen in light of AB398’s passing.

In terms of volume, 7,147,000 contracts exchanged, a healthy total by the markets standard and an increase from previous weeks. Tues and Weds were the most active days with sellers benefiting before Thursday’s price crash. 81% of the week’s volume was traded on the current vintage whilst 2018 and 2019 also saw small trade of 935,000 and 400,000 tons.

With participants looking to open positions before the auction, Open Interest (OI) creation saw an overall positive net change of 3,699,000 contracts. Next month’s front contract, Sep 17, saw the highest increase in OI with a net change of 1,300,000 contracts while the Dec 17 benchmark saw the dilution of 1,300,000 contracts. The Oct 18 also saw an impressive net change of 850,000 contracts.

Ontario’s carbon market remained static as a 6th week passed without a single trade. OCA prices mirrored the CCA’s activity, closing at CAD 18.82 (USD 14.89 as of Friday’s exchange rate) on the current front contract.

 

Billy Hamshaw (billy@californiacarbon.info)

Ronjoy Bezbarua (ronjoy.bezbarua@californiacarbon.info)

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