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Weekly volumes reach annual low as prices ascend

October 16, 2017 by Ronjoy Bezbarua

CaliforniaCarbon.info, October 16, 2017:

After a very active first week of October, the California carbon allowance (CCA) market slowed down dramatically last week in terms of both volumes traded and open interest creation. However, despite the steep fall in trade, the weekly price range for CCAs traded on the InterContinental Exchange (ICE) widened considerably as compared to the past week.
The current front (V17 Oct17) and benchmark (V17 Dec17) which stood at USD 15.31 and USD 15.36, respectively, saw price movements to the tune of USD 0.09. Unlike the previous weeks, however, the momentum did not remain neutral with the current front and benchmark both gaining USD 0.09 as compared to the previous week’s closing price. The year ahead implied funding rate peaked on Thursday, reaching 2.68% for the first time since January.
Volumes traded for the week dropped steeply to 867,000 tons and was the lowest for the year and the V2017 was the only vintage that saw action last week. Delivery-wise, trading was confined to the Dec17 and the Dec18. The Dec17 delivery traded 607,000 tons with a contribution of 70%, while the Dec18 traded 260,000 tons with a contribution of 30%. The weekly traded volumes were the lowest seen for the year.
Open Interest, despite having an overall positive net change of 215,000 contracts, was also subdued. New contracts were seen on the deliveries Oct17 (200,000 contracts added), Dec18 (175,000). Conversely, the Dec17 delivery saw a dilution of 160,000 contracts. In terms of vintages, all changes in open interest were seen for the current vintage i.e. V2017.
The Ontario carbon market, saw a minor gain of CAD 0.02 for the week in terms of the current benchmark. OCA front and benchmark prices now stands at CAD 19.08 and CAD 19.17, respectively. As seen since 21 June, no trade or any change in open interest was observed.

Ronjoy Bezbarua (ronjoy.bezbarua@californiacarbon.info)

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