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Thermal Coal Prices rise to 3-week high

European coal prices rose to near three-week highs in Monday trading as a jittery gas market fed into bullish sentiment amid signs of growing demand for stock replenishment.

The front-month API 2 contract was last seen up USD 1.75 on the previous settlement at USD 113.50/t, on Ice Futures.

It earlier reached its highest level since 6 March of USD 113.70/t.

“Everything is up today – coal, gas, EUAs and oil,” said a coal analyst with a trading house, noting “this is an energy complex movement on geopolitical risk, due to the events since Friday”.

In particular, he pointed to an escalation in Russian attacks on Ukraine’s energy system, which this weekend struck a gas storage facility, albeit with no tangible impact on operations.

“There are more attacks, so it’s not looking good,” he added.

Analyst firm Kpler said in a note that European coal prices were drawing support from gas, amid concerns of supply disruptions.

The benchmark front-month Dutch TTF gas contract was seen last up EUR 0.99 at EUR 28.77/MWh, underpinned by concerns over maintenance at the second largest US LNG export terminal, Freeport.

“Once these concerns subside, European coal prices are expected to revert to reflecting underlying fundamentals, consequently resuming their downward trajectory,” Kpler added.

A head trader with a coal trading firm also pointed to support from the competing gas market, noting, however, there were supportive signals from a coal-fundamental viewpoint.

Restocking demand
“Demand is reviving, so I’m not so bearish now,” he said, adding that this was primarily due to post-winter restocking.

The analyst agreed, citing buying interest from Morocco and Turkey, despite a still sluggish European market.

Stocks at key Amsterdam, Rotterdam and Antwerp (ARA) import terminals last week slipped to three-month lows of 5.6m tonnes, according to provisional Montel estimates.

Thermal coal imports to northwestern Europe were provisionally forecast to reach around 2.52m tonnes this month, down from 2.81m tonnes in February, according to DBX projections.

By: Laurence Walker

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