REC Trading Report-April 2012

Today’s trading session was the first of the new compliance year (2012-13). Both volume and price expectations were low, given that there is no real pressure on the obligated entities to buy this early in the year. Considering that, both prices and volumes surprised – IEX and PXIL traded price was Rs 2,201/ REC (32% higher than the floor price of Rs 1,500; we believe that prices and volume this month are not comparable with March 2012 as the drivers for buyers and sellers were very different last month).
The total demand was for 263,913 RECs. This appears high compared to last month (demand last month was for 389,000 RECs; last April was 260) given that this is the first month of the compliance year.

Supply was impacted by low issuance of RECs (118,000 in April vs 204,000 in March) likely due to reduced urgency on part of generators to claim RECs. Total available RECs were 157,000, of which 133,000 were bid for sale (85% participation). At this stage in the market, the participation level was high. Of the total bid for sale, only 54% were sold indicating seller’s willingness to hold and expectation of even higher prices later in the year.
With the new floor and forbearance price from this financial year coming in picture, today’s price will bring some smile on the sellers. The relatively high demand and prices are an indication of expectation of enforcement.

No solar RECs were traded this month.