ChinaCarbon.net.cn, March 21, 2016: The Guangdong Provincial Development and Reform Commission will auction 500,000 allowances at a floor price of $12.69/ton on 29 March, 2015. The auction will be the third of four to be held by the commission for the 2015 compliance year.
The last auction held in December cleared 300,000 allowances at RMB 15 and was followed by a bullish price run in the secondary market. Allowance prices had increased by 20% to reach a four-month peak of RMB 18.85 within seven trading days after the auction.
Prices have leveled nearer to the RMB 15-16 range since then. Last week GDEAs closed at RMB 15.98 after trading scanty volumes through the week.
Guangdong has traded 880,569 allowances through the secondary market this year. That is nearly eight times the volume transacted during the same period in 2015. Characteristically, this market, like the other pilots, sees liquidity concentrated nearer to the compliance deadline in June.
Guangdong auctions have fared better in 2015 after the commission adopted a flexible price floor set at 80% of the weighted average market price in the three months preceding the auction. Historical trends would suggest that this auction clears well above the floor as well.
Rahul Rana (email@example.com)