CaliforniaCarbon.Info 9 Jul, 2018: California Carbon Allowances (CCAs) prices experienced a steady gain this week. Market also slowed down with noticeable trades exclusively under V18 Dec 18, V17 Sep 18. This might be because market is reverting to inactive sessions between auctions which is characteristic. The other possibility for lack of trades might be that entities have procured enough allowances to meet compliance obligations end of this year, with high trades in Jun18. As well as with Ontario’s exit, entities might be a little more cautious as regulations and impending de-linkage is in a state of limbo. At the beginning of the week prices increased by 1-cent. They experienced a similar price increase the day after following which prices remained unchanged until the end of the week. As of Friday (07/09) front price (V18 Jul18) is trading at US$ 15.02 and benchmark (V18 Dec18) is trading at US$ 15.26. Daily prices can be tracked using CCA price tracker below.

Volumes traded this week have further decreased from slightly over 5.6 million tons last week to 200,000 tons this week. As mentioned earlier, entities traded only under V17 Sep18 and V18 Dec18. Around 120,000 tons were traded under the former while 80,000 tons were traded under the latter. Trades under V2017 made up 60% of the total volumes and the remaining 40% were made up by trades under V2018. This is evident of a period of lull in trades between auctions. It could also be indicative of entities’ response to the market as it is the beginning of the third compliance period.

After a week of absence in significant trades, open interest was negative last week. Around 575,000 contracts closed which is a complete reversal to market behavior last week when 1.3 million contracts were opened. Around 100,000 contracts closed for Jul18, 50,000 contracts closed for Sep18 and 600,000 contracts closed for Dec19. The only delivery that experienced a positive OI was V18 Dec18 with an added 175,000 contracts.

Analyst contact: Abhilasha Fullonton (abhilasha.fullonton@californiacarbon.info)