Over-the-counter prices for California carbon allowances continued to slide, with losses inspired by lackluster buying interest ahead of the next quarterly allowance auction.
As of Feb. 6, broker data showed the February 2018 vintage 2018 California carbon allowance contract in a bid-and-ask range of $14.84/tonne to $14.92/tonne, down 4 cents on the week. The March 2018 vintage 2018 California carbon contract was seen in a bid-and-offer spread of $14.88/tonne to $14.93/tonne, easing 5 cents from the week prior.
The benchmark December 2018 vintage 2018 California carbon contract was assessed in a bid-and-offer spread of $15.24/tonne to $15.32/tonne, declining 5 cents on the weekly period.
Market participants are likely refraining from making secondary market purchases before the Western Climate Initiative, or WCI, holds its next quarterly auction Feb. 21. The sale will offer more than 98.0 million current vintage allowances and more than 12.4 million advance auction allowances. The current vintage offering will consist of nearly 15.0 million 2016 allowances and more than 83.0 million vintage 2018 allowances.
A reserve price of US$14.53/tonne will be used. The WCI is made up of California, Quebec and new member Ontario.
At the WCI's prior auction held Nov. 14, 2017, which included only California and Quebec, 100% of the more than 63.6 million current vintage 2017 allowances sold at a record high of US$15.06/tonne, or $1.49, above the price floor of US$13.57/tonne and up from a clearing price of $14.75/tonne in the previous sale. Additionally, 100% of about 9.7 million vintage 2020 carbon allowances were purchased at US$14.76/tonne.


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