Today was the first Government NZU auction for 2022.  The Government holds these auctions once a quarter as a mechanism for controlling the ceiling price of NZU’s.  The auction displayed a large volume of interest, despite current global uncertainty, taking up not only the primary volume of 4.825 million tonnes, but also almost all of the cost containment reserve of 7 million tonnes, leaving little cost containment reserve (CCR) for the next 3 auctions this year.  A total of 10.5m units were sold.

With only 1.3m units left to use as cost containment over the next three auctions the Governments ability to restrict the ceiling to $70.00 seems to have gone out the door.

The auction cleared at exactly $70.00, probably reflecting the understanding from participants of the ‘confidential’ reserve price of $70.00 would have applied.  $70.00 was also the trigger price at which the CCR became available.

There were 32 participants, of which 30 were successful in purchasing some volume. This is a strong result and Commtrade has seen an immediate uplift in the spot price to $74.50 at time of writing.   This price is expected to continue to steadily rise over the next few weeks.y, and we may miss opportunities to reduce multiple impacts at once. The dialogue around carbon and reforestation is of crucial importance, but the balance of understanding ecosystems and biodiversity are just as pivotal in this process to realise our climate goals. It is for this reason, Forest Leaders recommend solutions to their investors which will restore the land, our water and the climate.