The Coal Trader

Coal News for Mining & Investing Professionals

Prices retreat further from multi-month highs

European coal prices have slipped more than 7% from multi-month highs reached last week as easing regional demand offset lingering concerns of tightening global supply.

The front-month API 2 contract was last seen down USD 2.15 on Monday at USD 107/t on Ice Futures, though last Wednesday it touched its highest since 11 December of USD 115.65/t.

A head coal trader with a Swiss trading firm said the market had “overshot” last week, adding that – given ample supply and waning seasonal demand – it was “so obvious it would come back down”. While there was still some spot demand for cargoes in Europe, as well as from Turkey, overall flows of coal into the region were declining, he said.

An operations manager at a large import terminal agreed, adding there was some slowdown in vessel arrivals to northwest European ports linked to lower demand from European coal-fired generators.

As such, stocks at key Amsterdam, Rotterdam and Antwerp (ARA) import terminals had declined by nearly 10% over the past month to around 5.8m tonnes, according to Montel estimates. And thermal coal imports to northwest Europe were provisionally forecast to reach around 2.9m tonnes this month, down marginally from February and 2m tonnes lower than in the same month last year, according to provisional DBX projections.

Sanction issues
Yet there were still persistent concerns of tightening global supply with fresh US sanctions imposed late last month on key Russian exporter Suek likely to deter buyers in Asia.

“The imposition of US sanctions on producers, including Suek, will create additional challenges for the trade in Russian coal, and thereby can be expected to increase demand for coal from other origins, including Australia,” said Toby Hassall, coal analyst with LSEG.

“I guess market is less concerned with the Suek issue [but] I’m not so sure we are out of the woods though,” said an analyst with a coal supplier.

Author: Laurence Walker