Carbon Market Analysis: carbon resists rating downgrades

Marius Frunza's sEUA and sCER forecast

Recent downgrades to European economies came when markets seemed to find support with a positive outlook. Nevertheless, markets were not responsive to the announcement since this news has been expected for some time, and already de facto priced since the autumn of 2011. The equity market started the week on a positive trend, keeping the previous week’s upward line. Carbon prices started in negative territory, but the variation is mainly due to the fears of an over-supplied market. Despite an uptrend of the energy complex, the carbon prices are clustered around the €6.50 level.

Given the current state of the supply-demand equilibrium, there is no reason to think that the prices might enter into positive territory before Q2. The only support could come from an UE decision con- sisting of a more aggressive phase III target.

Marius Frunza is eCO2market’s Head of Research. This article originally appeared in the 25 January 2012 edition of eCO2abacus. Click here to receive eCO2abacus in your email or view previous editions.

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