CO2-market remains attentive; post 2008 price remains at € 20 level

It seems that market participants didn't come to rest after last Month's price corrections. There is no interest in taking clear positions yet. Trade volumes are low, around 1Mton a day. And the sudden Summer temperatures and the World Championship gets all the attention. The next compliance moment is far away, April 2007. It appears that companies witness theitr own higher emission levels and realize that they better stick to their surplusses. Companies that sold their EUAs in April to banks and power companies are satisfied with their profits.

Buyers take their losses. No one yet knows which and how many companies will be long or short in 2006. It is a matter of assessing economic developments and following weather predictions.
The price level for EUAs after 2008 remains high, around € 20, which shows trust in the carbon markt for the longer term, though trading volumes are limited. Power companies are building their positions for after 2008 slowly.
The Draft Second Allocation Plans (2008-2012), due end of June, don't seem very ambitious yet: some percents sharper than NAP-1, since the European Commisson called for 8% cuts. Market participants seem to expect that the Commission, with the 2005 emission verification reports in their hands, have ample tools to bring member states to strengthen their NAPs and to ensure larger EUA shortage. But it is on the other hand speculative too, since there are many CDM projects in the pipeline that may bring CO2 prices down in the longer term.