European coal prices this week remained relatively well supported, underpinned by heightened utility demand, diminishing stocks and potential disruptions to Russian and Colombian supply.
The front-quarter API 2 contract traded on Friday at USD 66/t, up USD 0.75 from last Friday’s settlement, but down from Tuesday’s near two-week high of USD 68.95/t, on Ice Futures.
Further along the curve, the Cal 22 was up by USD 0.80 on the week, at USD 67/t, but also 1.7% lower than this week’s peak on Tuesday of USD 68.15/t.
In physical trading, there was some pick-up in spot demand with three cargoes having traded via broker Global Coal, two of which were specified as Russian origin.
The most recent trade, for a May-loading 25,000t Russia-Amsterdam parcel, was concluded on Thursday at USD 67/t.
“There’s not loads going on, but we see stocks are dipping quite consistently at the moment,” said a London-based coal broker.
Inventories at Amsterdam, Rotterdam and Antwerp (ARA) were assessed this week at 3.44m tonnes, down 2.7m tonnes from the same time last year and the lowest since September 2016, according to Montel estimates.
This was in part due to a preponderance of short-haul Russian vessel arrivals, which are less likely to be stockpiled than longer-haul deliveries from Colombia or the US.
“[But] the coal burn is fairly okay as well, given the [low] temperatures,” the broker said, meaning increased volumes were likely being drawn from stock.
According to data from Finnish technology group Wartsila, coal-fired generation across western European in January was up more than 10% versus the same month last year.
“Coal demand seems to be picking up a bit in Europe, due to cold weather and low stocks at ARA,” said Burak Cetinok, head of research at Arrow Shipbroking Group.
Colder than normal conditions in some parts of Europe could last until April, according to US forecaster the Weather Company.
Cetinok also pointed to the influence of high gas prices in recent weeks, which had led to an increased regional coal burn.
Supply concerns
Meanwhile the market faced double-barrelled supply threats of ice-related disruptions to Russian loadings in the Baltic and a rail blockade halting shipments from the key Colombian Cerrejon mining complex to its export hub, Montel reported.
A utility coal analyst said these threats could lead to a significant tightening of supply particularly if coinciding with cold weather, low wind-power generation levels and still-low ARA stocks.
“But it’s not very likely we will have all the stars aligning,” he added.
Another analyst, with a large exporter, said much depended on the outlook for gas supply, and prices.
“The [coal] market will be supported, but gas needs to be supported as well,” he said.
Source: Montel
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