Carbon price will be stable in the next four weeks with downside risks

In the next month, we forecast carbon prices will remain level as the economy struggles and strong hydro output persists.

Low industrial power demand persists in October

Industrial output will remain weak in October, typified by falling metal prices. Energy demand from the industrial sector will remain subdued, as will residential demand with mild weather forecasted for the next four weeks. Low energy demand will supress EUA demand slightly.

Available nuclear capacity will keep EUA price at bay

Nuclear output has improved in September and available capacity allows for higher output if demand needs to be met due to lower renewable output in the coming weeks. French output has increased significantly with more reactors coming back online. Nuclear output will have limited impact on EUA demand overall, but a downside risk is present if output increases.

Fossil fuels will have limited impact on EUA demand in October

Gas prices rose in September due to maintenance work in the European supply chain, causing gas-to-coal switching, which has now been concluded. We forecast that gas prices will ease slightly in October, with high storage levels and a return to normal supply chain operations. Overall, fossil energies will have little to no differential impact on the carbon price.

Strong hydro output will continue this month

Hydro generation has been strong in Europe and we expect this to continue in October. Solar generation will weaken with the decreasing daylight hours, but this will be balanced by increasing wind generation. Overall, renewables will have a neutral impact on carbon price during the next month.

If you want to hear more about carbon market developments and our short-, medium- or long-term carbon price forecasts, which are provided as part of CRU’s Sustainability and Emissions service, please email us at sales@crugroup.com, we’d be happy to discuss this with you.

The cut-off date of the data is 25 September 2023.

These and other economic developments that impact commodity markets are discussed with CRU subscribers regularly. To enquire about CRU services or to discuss this topic in detail, get in touch with us.

CRU experts discussed the impact of the war in Ukraine on commodity markets in a recent webinar. Experts from all major commodity areas joined CRU’s Head of Economics and an energy specialist to discuss markets one month on from the invasion of Ukraine. The webinar is available to watch on-demand here.