Core Viewpoint - The national carbon emission trading market (CEA) has seen a continuous decline in prices, with the latest price at 68.46 yuan/ton, marking a 35.54% drop since reaching a peak of 106.2 yuan/ton in November last year [1][2][3]. Market Dynamics - The CEA price drop is attributed to a supply-demand imbalance and the digestion of policy expectations, with the market currently favoring sellers who lack trading enthusiasm, leading to decreased trading volumes [3][4]. - The trading volume in the national carbon market has been notably low, with 14 trading days this year recording zero transactions, which is unusual compared to previous years [2][3]. Policy and Market Expectations - The market's price fluctuations are closely linked to the compliance period, typically resulting in lower demand and prices post-compliance [3]. - The introduction of the "Interim Regulations on Carbon Emission Trading" and calls for market expansion have initially raised price expectations, but these have since been tempered as market expectations are realized [3][9]. Market Expansion - The national carbon market expanded in March, including industries such as steel, cement, and aluminum, which is expected to add 1,500 key emission units, covering over 60% of national CO2 emissions [3][9]. - Despite the expansion, there has been no corresponding increase in trading volume or market activity, leading to discussions about the potential need for financial institutions to participate in trading [3][4]. CCER vs. CEA Pricing - The price of CCER (China Certified Emission Reduction) has remained stable at 85 yuan/ton, approximately 24% higher than CEA prices, leading to a price inversion [7][9]. - The demand for CCER is driven by both mandatory reduction requirements and voluntary purchases for corporate social responsibility, resulting in a more stable price compared to CEA [9][10]. Future Outlook - The current price inversion between CCER and CEA is deemed unsustainable, as prolonged discrepancies may reduce demand for CEA [9][10]. - The differing market mechanisms of CEA (mandatory reduction) and CCER (voluntary reduction) suggest that fluctuations in one market will not necessarily stabilize the other [10].