Front-year coal jumps to 5-month high
European front-year coal prices jumped to a five-month high in Wednesday trading, in part spurred by reports of more drastic reductions to Colombian supply and supportive related markets.
The Cal 21 API 2 changed hands last up USD 1.40 at USD 60.50/t on Ice Futures. Earlier, it reached USD 60.85/t, the highest for a front year since 18 February.
Anglo-Swiss trading and mining firm Glencore is seeking to suspend coal operations at its Prodeco coal-mining unit in Colombia for four years, Montel reported earlier.
“That announcement is the only bit of significant news I have heard in the last 48 hours to account for the current spike in API 2,” said an analyst with a coal-trading firm.
Colombia is one of Europe’s main sources of thermal coal, after Russia. Producers in both countries have been taking steps to limit output in recent months, to help reduce market oversupply and thereby underpin flagging prices.
A London-based broker also cited the likely influence of the Prodeco news.
“There is nothing else [supportive] I can see from where I’m sitting,” he said.
He added there had been no bids for physical cargoes, for European delivery, in the current session.
But an analyst with a coal producer also pointed to support from related markets, notably carbon.
The benchmark EUA contract initially rose 2.8% to EUR 30.46/t, only marginally below Monday’s 14-year high of EUR 30.80/t.
It was seen last up EUR 0.34 on Ice at EUR 29.98/t.
Although a higher carbon price erodes coal-fired generation profit margins – or the clean dark spread – it can also, conversely, prove supportive for coal in light of the bullish impact on power and gas markets.
The baseload Cal 21 German power contract traded last up EUR 0.97 at EUR 43.15/MWh.