Research – orbeo

Market intelligence

orbeo and Société Générale Commodity research team provide you:

- regular (e.g. monthly) information, briefs and analyses on CER market and its evolution;
- instant direct access to analysts at any time and update on price forecasts;
- designing and proposing a suitable and value maximizing strategy for managing and trading of CER’s: ORBEO trading desk will share its view on its own CER sale strategy and propose adapted timing / volume of market operations adapted to SOCAR’s flow of CER;
- access to latest market instruments on emission markets (e.g., options, swaps, cross-commodity deals).

Weekly market analysis

SG Carbon Drivers - 13/05/2008

Carbon market sees some CER talks

Last week, in spite of a carbon conference in Germany, the Dec08 EUA contract has kept a sustained pace – reaching €25.17 /t on Friday. One could even have felt a boiling market momentum when prices closed at €25.4 /t yesterday.

Soaring oil gave support to the carbon prices, with the crude barrel shattering a new record at $126 /b mainly on several supplies worries. Coal prices soared as well, with first nearby API2 prices rocketing to an all time high at $150.1 /t yesterday and FOB South African prices recording an 11-week high on shortage supply woes coupled with still strong Asian demand. While carbon-intensive fuels were going sky-high, UK gas prices have been traded at sustained levels, hovering around GBp60 /th for first nearby over the past week.

Some interesting movements have been observed on the carbon market as both EUA and CER contracts were moving up, but at a different pace. While EUA prices gained an average of €0.36 /t on the forward curve, CER crept upwards by an average of €0.75 /t. This lead to a narrower EUA-CER spread on the whole curve. Several factors can be mentioned, apart from the energy complex. The bullish wind was partially lead by recent news from the US where presidential candidate McCain talked about accepting CER, while the debate in the Congress on the Lieberman-Warner also evoked the possibility. Moreover, in an already uncertain market, concerns over tighter CER supply re-appeared as UN and technical support unit UNEP RISOE cut its forecasted supply volumes by 300 Mt to 1.5 billion.

The carbon market has finally found a direction over the past week and activity on CER could revive now with a corresponding tightening of the CER-EUA spread.

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