Summary:

1. ICE CCA front last traded at $29.00 (+0.77)
2. Weekly volumes shrunk to 17.3M tons (-55% WoW)
3. CFTC (1st Feb): Compliance entities reduced net short by 1.6M tons, fund managers increased net long by 3.6M tons

Last week at the InterContinental Exchange (ICE), CCA prices cruised in the range of $28-$29. Weekly volumes shrank to 17.3M tons, yet fresh OI of 3.8M tons entered the secondary market WoW*. As expected, market volumes were lower than average in anticipation of the upcoming joint auction in Feb. The new V22 Feb22 front last traded at $29.

Even with low trading volumes, the increase in Open Interest was relatively high. The benchmark contract gained 1.7M tons of fresh OI while the post-auction contract V22 Mar22 gained 1.8M tons. 

Data from CFTC (1st Feb) suggests that compliance entities reduced net short positions by 1.6M tons, swap dealers reduced net short by 2.5M tons. Fund managers increased net long positions by 3.6M tons.

As of 1st Feb, compliance entities’ total long and short positions are netted off. Fund managers have increased their short positions from 2.1M tons to 4.8M tons (below). While their long positions have grown by 4.8M tons.

Last week, US Stock Market Indices improved slightly. The Nasdaq composite gained 0.7% while S&P 500 rose 0.1%. 

The US Department of Labor will publish the January inflation rate on Thursday, with inflation expected to grow at 7.2% from a year ago. Arguably, high inflation rates will push up next year’s auction reserve price. But inflation is expected to decrease over the year. In the short term, the CCA market is expected to react. We expect some upward price volatility around the release of the news.   

*WoW OI Change reported between 27th Jan & 3rd Feb. 

*CFTC Data last updated 1st January

Analyst Contact:

Anant Jain (anant.jain@californiacarbon.info)