New Zealand units shed 3.4 per cent of their value this week as demand waned amid recent record prices.
Spot NZUs were valued at NZ$20.10 on Thursday, according to Point Carbon News’ price assessment, 70 cents down week-on-week and the lowest level in three weeks.
“Buyers have backed away a bit,” one trader noted, saying the recent surge in demand seems to have ran its course.
But despite the trend of lower bids over the week, two sources said they had seen a NZ$20.55 bid on Thursday afternoon for an unspecified number of credits.
Sky-rocketing CER prices in Europe earlier this month saw NZ traders sell their UN credits back into the EU market and replace them with cheaper NZUs, causing domestic demand to spike.
“It seems they have switched out of CERs and purchased back enough NZUs to meet their needs, at least for the time being,” the trader said, explaining why bids had slumped this week.
Secondary CERs for December 2011 delivery closed at €13.00 (NZ$24.55) in Europe on Wednesday, down 8 cents or 0.6 per cent week-on-week, after rising almost 10 per cent the week before.
The NZ dollar clawed back some lost ground against the euro, rising 2.4 per cent to nearly 0.53, making CERs cheaper for NZ-based traders.
Observers estimated around 250,000 NZUs changed hands during the seven days, around half the volume seen the week before.
“It is dropping off, and we think it will be lower tomorrow,” one broker told Point Carbon News.
“A large number of buyers who purchase on a monthly basis have now filled their minimum quota, and are not willing to purchase any more at the higher prices. Prices could start to rise again as buyers need more volume as we move into April,” he said.
But most market participants did not think the price would fall much from current levels, as sellers don’t want to see the price go back down to the previous NZ$19-20 range.
“There seems to be massive reluctance to sell for lower than NZ$20,” the broker said.
NZU sellers are primarily foresters who have received permits for planting new trees.
