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Thermal coal-European prices dip on weak demand

European thermal coal prices eased on Wednesday, plagued by weak demand and large stocks.

European cargoes for delivery into Amsterdam, Rotterdam or Antwerp (ARA) in July last closed at $56.95 a tonne, having fallen around 5 percent in the past two weeks.

"That (price) is considerably lower than what we've seen recently, nearby demand in Europe is very very lacklustre," a trader said.

"Gas is competitive which is a major reason, hydro availability is very good, so even though you are having a hot summer in many parts of the continent it's not helping coal burn."

European API2 2015 coal futures were down 0.3 percent at $57.95 a tonne, near a more than nine-year low of $55.25 hit on April 8.

"UK demand has dropped so you see that coal trying to find a home as well," a second trader said.

From April, Britain's carbon tax, which charges power producers for each tonne of carbon dioxide (CO2) they emit, almost doubled to 18.08 pounds per tonne.

Traders said this is hitting UK coal imports.

A slowdown in demand from top coal consumer China, combined with uncertainty over quality requirements for imports after new restrictions were introduced in January, also weighed on prices.

Australia's government is looking into allegations by an industry group that Australian coal cargoes are being unfairly rejected by China.

In South Africa, prompt cargoes from the country's Richards Bay terminal last closed at $56.45 a tonne, down around 4 percent from a fortnight ago as weak Indian demand weighed.

India's coal imports in June were largely flat at 20.18 million tonnes from a year ago, provisional data from commodities trader mjunction showed, as state behemoth Coal India ramped up supplies under a sustained government push.

"It's surprising how weak demand is, it's starting to weigh on sentiment quite a lot," a trader said.

"I think the market is probably due another leg down."

source: http://in.reuters.com