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Analysts see mixed signals on WCI auction, trim price forecasts

Bullish sentiment in recent months could help counteract weaker underlying fundamentals in Tuesday’s WCI auction, while Ontario’s departure from the programme will continue to limit price increases over the next decade, according to analysts.

Tuesday’s sale offered nearly 89 million current allowances, including 15.9 mln units that went unsold at previous auctions. The results will be published on Aug. 21.

It was the first WCI auction after Ontario Premier Doug Ford revoked the province’s participation in the joint ETS in June. Although Ontario’s quick exit from the linked market had an initial bearish impact, WCI prices have since recovered by around 25 cents to settle at $15.14 on the Aug-18 V18 contract on ICE Monday.

This points “to a healthy auction result above the floor,” which sits at $14.53 in 2018, according to the latest quarterly forecast from Toronto-based consultants ClearBlue Markets.

ClearBlue’s Nicolas Girod told Carbon Pulse last week that an auction clearance at around $15.00 would be a “very positive result”.

Read the Full Carbon Pulse Article Here

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