| © ICIS HEREN - No spot means fewer sellers |
| 2011-02-01 |
| But liability risk is not the only outcome of the hacking attack that could curb liquidity. Several traders point out that no spot market means that banks are likely to sell lower volumes forward. It is a common strategy for banks to buy on the spot from natural industrial sellers, and sell on the forward market. This is now not possible. But any drop in liquidity due to banks becoming less active will probably be offset by utilities trading higher carbon volumes in the first half of the year, in order to hedge their forward electricity sales, according to trading sources. Even though power companies come to the market to hedge at different times, and there is no clear hedging season, the pattern is for this kind of buying to pick up in spring, they say. So no spot market is likely to mean fewer sellers - but not fewer buyers. That would imply a shift in the supply/demand balance, rather than lower liquidity. Prices have so far trended upwards since mid-January - although whether this is due to the spot shutdown or bullish German power prices is up for debate. IS (THE ICIS HEREN REPORTS - EDCM 6021 / 1 February 2011) |
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