Bloomberg News

EU Carbon Has Biggest Weekly Drop in Year Before Supply Surge

November 16, 2012

European Union carbon permits for December fell 17 percent this week, the biggest drop for almost a year, ahead of a surge in supply next week and beyond.

EU allowances declined 3.2 percent today to close at 6.90 euros ($8.78) a metric ton on the ICE Futures Europe exchange in London, extending a three-day plunge. The permits lost 17.2 percent in the week through Nov. 25.

Carbon may drop below 6 euros a ton before a vote on a plan to address a market glut set for Dec. 13, according to Deutsche Bank AG. The EU this week proposed to temporarily curb 900 million tons of supply in the three years through 2015.

Isabelle Curien, an analyst at the bank in Paris, forecast carbon will trade from 6 euros a ton to 8 euros a ton in the period through Dec. 13, according to an e-mailed research note dated today.

“Given the very large volume of allowances coming to market in coming weeks, particularly from the pool of 120 million Phase-3 allowances to be auctioned early, we think there is a risk that prices could fall below 6 euros a ton in the short term,” she said.

Supply sold at auction next week will surge to 18.5 million tons from 11.1 million tons this week, she said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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