Strong supply will continue to curb Europe coal prices
European coal prices face further losses over the coming days as sluggish demand, high stocks and bearish signals from the Pacific basin weigh on the market, participants said.
The front-month API 2 contract traded last down USD 1.10 on Ice Futures to USD 58/t, while the front year was USD 0.66 lower at USD 67.40/t.
The latter contract earlier touched a near three-week low of USD 66.95/t.
“The fundamentals are not supportive at the moment,” said a coal trader with a London-based energy firm.
“Now the heatwave is over, we are back on the downward trend,” he said, regarding unusually hot weather across Europe last month, which underpinned demand for coal-fired generation due to heightened cooling system demand and a spate of nuclear outages.
“The German coal burn dropped last week and Chinese demand is down from this year’s peak,” the trader said, also pointing to still high stocks at Amsterdam, Rotterdam and Antwerp (ARA) dry bulk terminals.
Inventories at the four key ARA terminals were assessed this week at 6.76m tonnes, virtually unchanged on the week, but still 20% higher than at the same time last year. (see Stocks section).
In physical trading, the Global Coal Des ARA index was assessed last at a three-week low of USD 58.87/t – down 4% on the week.
“No one is bidding, while everything is [plunging],” said a physical coal broker, adding there were some offers seen in early trading, but all were around USD 1 above the prevailing market price.
“Russian [free-on-board] prices are very low [so] I don’t think many producers are having a good time of it,” he said, in reference to Russian coal production in July falling to a two-year low.
An analyst with a Russian coal supplier said the near-term price outlook remained bearish, amid lower gas prices, but also due to reports of fresh Chinese import restrictions.
Market sources said restrictions had been placed on imports via China’s Guangzhou port, the country’s largest southern coal import hub, although this could not be confirmed.
The Dutch gas TTF front-month contract traded last down EUR 0.51 to EUR 11.50/MWh.