This recent article, Stubborn NZUs Create an Asymmetric Trading Opportunity explores the current market dynamics and what they mean for those involved in forestry, emissions trading, and carbon offset strategies. Whether you’re directly trading NZUs or just keeping an eye on market trends, this is an interesting read to help understand more about the market.
New Zealand Unit (NZU) prices have remained low despite the auction floor price being set at $68 for 2025, creating an asymmetric risk trading opportunity. As highlighted in Stubborn NZUs Create an Asymmetric Trading Opportunity, an article from Nigel Brunel, the Managing Director at Marex New Zealand, the market is currently pricing NZUs at around $60, offering a clear discount to the auction floor. The first auction of 2025 has now taken place and did not clear, meaning the unsold volume will roll into future auctions, potentially forming a temporary cap on the market. Furthermore, with up to 6 million tonnes of auction volume for 2025 not entering the market below $68, this represents a significant reduction in supply. However, historical trends suggest that NZUs tend to rally later in the year, and given that estimated supply (18 million tonnes) is significantly lower than the 32–35 million tonnes required for annual surrender obligations, a price increase may be inevitable.