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CIF ARA spot thermal coal price rises for first time in 12 days

09 Feb 2018

The CIF ARA spot market rose 15 cents Wednesday, the market's first positive price movement for 12 days, as the market was bid and traded higher.
 
A 50,000 mt, March-loading, multi-origin, cargo traded at $85/mt, the first confirmed delivered-Europe deal since January 16, when a February-loading cargo traded at $97.50/mt.
 
Utilities were still well-covered for coal, and some had even been heard offering excess tons on the spot, although no counter bids were reported.
 
The spot price dipped below $85/mt Tuesday, a level several sources said would price most US-origin coal out of the continent, so the trade at $85/mt was of no surprise to sources, despite the apparent lack of requirement for prompt cargoes.
 
A Northwest Europe-based broker said there was plenty of Russian- and Colombian-origin coal on the continent, and they believed there was an oversupply of US coal due to the blending strategy employed by many European utilities in recent months.
 
S&P Global Platts FOB Richards Bay 5,500 kcal/kg NAR price fell a further 60 cents Wednesday, but sell-side sources for this coal were not looking to the Atlantic Basin as a destination due to strong competition from other origins.
 
"We don't want to sell there because there is too much Russian and US coal competing on price," a West Europe -based trader of South African coal said.
 
FUTURES MOVING INTO CONTANGO
 
European thermal coal futures gained across the back end of the curve, but remained on the whole at weak levels with spreads in the quarterly contracts moving into contango.
 
Sources said the market was more supported from yesterday's sell off as global stock markets stabilized.
 
Market sources said the front of the curve remained under pressure, observing the negative spreads occurring in the Q2/Q3/Q4-18 contracts throughout the day.
 
The Q2/Q3-18 contracts ended the day with a spread of minus 15 cents, having been minus 10 cents yesterday.
 
The back of the curve picked up slightly more support, likely to be on the back of mildly stronger German power markets, gaining 45 cents on day, with the prompt month contract only gaining 25 cents on day.
 
The back of the curve was also likely to have been supported by a firmer FOB Newcastle curve, rising around 25 cents on day.
 
 
Source: platts.com