Coal news and updates

European physical coal prices rose on Tuesday as export trouble in Colombia threatened to cut supplies to Europe by 10 percent, but traders said healthy stockpiles meant that prices were unlikely to rise much further.

 

The Colombian government passed a law last year requiring coal producers to build direct ship-loading facilities in their ports by Jan. 1, 2014. These enclosed conveyor belts, which pour coal directly into the holds of vessels, reduce the pollution associated with the use of cranes and barges.

 

U.S. mining company Drummond, which provides around a third of Colombia's exports, has halted loading at its port, because it does not expect to finish building its system until March.

 

European physical coal prices have risen almost 8 percent as supplies have started to tighten for delivery during Europe's peak winter energy demand period.

 

March deliveries to Europe's main terminals at Amsterdam, Rotterdam and Antwerp (ARA) March were trading at $85 a tonne on Tuesday, up 70 cents since Monday's close.

 

Deutsche Bank said a halt to Drummond loadings from Colombia would probably remove 5.5 million tonnes of supply in the first three months. France's Societe Generale estimated the cut in supplies at 4.5 million tonnes.

 

Both banks said, however, that the impact on Europe's coal markets would be limited and was not likely to last for long. Other suppliers such as the United States could step in to make up for lost Colombian cargoes, and European stocks as of end-December were healthy at almost 6.5 million tonnes.

 

In other physical coal markets, prices also rose, with cargoes for export from South Africa's Richards Bay terminal in February up 30 cents to $84.90 per tonne.

 

Deutsche Bank said in a research note that it expected coal markets to be balanced this year and that prices were not likely to fall further.

 

"With the market balanced in 2014, we expect that import demand growth in India, slower supply growth in Indonesia, and strengthening economic conditions will limit the magnitude of any further price declines," Deutsche Bank said. It added, however, that new supplies could pull down prices by 2015.

 

 

Source: Reuters