Germany sells spot carbon permits at 69.68 EUR ton on EEX

Germany sells spot carbon permits at 69.68 EUR ton on EEX

Germany has recently sold spot carbon permits at a price of 69.68 EUR per ton on the European Energy Exchange (EEX) [1]. This transaction comes amidst a broader trend of declining prices for EU carbon permits, which have dropped to around €66 per tonne, marking a six-week low [1]. The weakened demand for carbon permits is attributed to several factors, including the stagnant manufacturing sector in the Eurozone, which has shown no signs of recovery. The HCOB Eurozone Manufacturing PMI remained stagnant at 45.8 in August 2024, indicating over two years of ongoing contraction in manufacturing activity [1].

The prolonged decline in manufacturing activity is linked to tighter ECB financial conditions and the lingering impact of earlier energy price spikes. Additionally, sluggish economic growth and weakening factory demand in China, coupled with the ISM Manufacturing PMI showing five consecutive months of contraction in US factory activity, have intensified concerns about a global recession [1]. These factors have contributed to the decrease in demand for carbon permits, leading to a 16.37 EUR or 19.75% decline since the beginning of 2024 [1].

Despite the current downward trend, EU carbon permits are expected to trade at 68.14 EUR by the end of the current quarter and at 62.05 EUR in 12 months' time, according to global macro models and analyst expectations [1]. This indicates a potential recovery in the market, driven by anticipated improvements in economic conditions and manufacturing activity.

References:

[1] https://tradingeconomics.com/commodity/carbon