Coal news and updates

European physical coal prices weakened slightly on Tuesday as fears of a regional gas supply crisis eased, after military tensions between Russia and Ukraine had boosted contracts the previous day along with gains in natural gas markets.

Cargoes for delivery in May to the ports of Amsterdam, Rotterdam and Antwerp (ARA) were valued at $74.20 a tonne on Tuesday afternoon, down $1 since Monday.

Traders said the drop was in line with lower spot gas prices, which eased following a 10 percent rally on Monday. In Monday's session the market was bracing for cuts in Russian gas supplies to Ukraine, an important transit route to western Europe's gas customers.

Coal competes with natural gas as a fuel for power generation, "so when there's a threat of gas supply cuts, potential demand for coal as a replacement fuel lifts prices", one coal trader said.

"But as a Ukraine gas supply disruption looks unlikely for the moment, the need for replacement purchases has receded, and so have coal prices," he added.

Gas prices eased on Tuesday as most analysts expect no immediate Russian supply cut and because healthy reserves following an unusually mild winter left markets well supplied.

Despite the Ukraine turmoil, the coal market remains oversupplied, and available cargoes are expected to rise further in April as coal miner Drummond restarts its exports from Colombia.

Drummond halted shipments pending the installation of automated ship-loading facilities, required by a law that came into force in January.

The weaker physical market also fed into financial products, where API2 coal swaps for delivery next year were down half a dollar at $80.80 a tonne.

Coal trading platform globalCoal said its futures and options volumes had risen 23 percent versus January to reach 122,130 lots.

It said 71 percent of these trades had been ICE Rotterdam (Europe) contracts, compared with 15 percent ICE Richards Bay (South Africa) and 14 percent ICE Newcastle (Australia) deals.

 

 

Source: Reuters