Coal news and updates

European physical coal prices dropped on Monday, ending a premium over Australian products which had been in place since early September.

 

European coal prices into the main import terminals at Amsterdam, Rotterdam and Antwerp (ARA) and for delivery in December were trading at $83.50 a tonne on Monday afternoon, down from over $90 a tonne 10 days ago.

 

With Australian coal valued around $84 a tonne, this meant that the price premium European coal established over Australian products in early September came to an end this week. It also showed European prices at similar levels as South African cargoes, which were valued just under $82 a tonne, down from almost $90 in late October.

 

"October's price rally has hit a wall and the coal market is now back to its usual price falls that have dominated the market since 2011," one coal trader said.

 

Traders said the main reason for the drop was that a trading house had largely closed major long positions that had been buoying prices of South African and European physical coal. Weaker oil prices were also helping to pull down the coal market.

 

Brent crude for immediate delivery has moved towards a contango price structure - where the cost of immediate supply is cheaper than in the future - for the first time since June, reflecting easing concern about supplies and weak refinery demand.

 

Coal's previous price rally in October, which saw European physical prices rise by 20 percent, triggered record trading volumes, with screen brokers globalCOAL reporting volumes of 129 million tonnes traded for Rotterdam in October and 45.5 million tonnes being dealt in South African cargoes.

 

GlobalCOAL also said that the "highest monthly volume for the ICE Coal Futures portfolio recorded in October with 195,286 lots cleared, exceeding last month's previous record by 33 percent."

 

API2 2014 coal futures were trading at $82.50 a tonne on Monday afternoon, three dollars below their late October high but still two dollars above the most recent lows seen earlier last month. 

 

 

Source: Reuters