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New UserEuropean coal prices rise on deeper Ukraine crisis
21 Apr 2014
Reuters reported that physical coal prices for Europe and South Africa rose on Wednesday as the Ukraine crisis incurred a risk premium in Europe, while higher Indian demand and a planned maintenance lifted prices for South Africa.
Cargoes for delivery in May to the ports of Amsterdam, Rotterdam and Antwerp (ARA) traded at USD 77.30 a tonne on Wednesday, up USD 0.35 since their previous settle, and prices for South African Richards Bay cargoes in May were up around a dollar to USD 79 a tonne.
Traders said that European prices had risen since the beginning of the month as a Ukrainian risk premium was priced into the market.
One utility trader said that "If the Russians cut gas supplies to Ukraine, that will sharply lift gas prices there, and utilities would fuel switch from gas to coal as much as they could, so the coal market is also being affected by Ukraine."
Unprecedented talks across the European Union this week have shown it scrambling for solutions to break its dependence on Russian gas and help supply Ukraine.
The EU faces a daunting task in quickly overcoming a mountain of logistical challenges, ensuring supplies within Europe, avoiding breaking binding contracts, and making sure Ukraine does pay up for gas.
Russia supplies 30% of Europe's gas needs, 40% of which gets to the EU via Ukraine. Russia has threatened to cut off supplies to Ukraine because of debts, reviving fears of a repeat of supply cuts of 2006 and 2009.
Bullish South Africa
Coal prices in South Africa have risen even more than in Europe, albeit for different reasons.
Cargoes for delivery in May from its Richards Bay terminal have risen some 7% since the beginning of the month to around USD 79 per tonne on Wednesday.
Traders said that the sharp rise in prices had come on the back of several parallel developments.
High Australian Output
The weakest coal market region is currently Australia, where May contracts last settled at USD 73.60 a tonne, almost 15% below last peaking in December.
The coal trader said that "Demand in China, which is Australia's main buyer, is weakening at the same time that Australia's production hit record highs in the Q1."
Source – Reuters