Nena News

COAL OUTLOOK – Well-supplied market faces losses

(Montel) European coal prices may come under some pressure this week, as softening oil prices and a dearth of fundamental support from the supply or demand sides weighs on the market, analysts said on Monday

The Cal 17 API 2 contract last traded on Ice at USD 46.55/t, down USD 0.28 from the previous session and a marginal 1% lower than last Monday’s close.

There are few fundamental drivers to warrant further price gains, said Diana Bacila, senior analyst at Oslo-based energy consultancy Nena.

“[Colombian producer] Drummond has solved its problems – so there is no risk of a strike – and there are still high exports out of Russia,” she said, regarding Drummond signing a three-year contract with its Colombian workers last week.

Russia’s April coal exports hit a seven-month high of 432,000t/day, Montel reported.

On the demand side, combined coal-burn levels in seven key European countries, monitored byNena, were down by around 30% year on year, over the past month, Bacila said.

This was largely due to low generation levels in the UK, heightened competition from gas and strong renewables power output in Germany, she added.

Upside risks
Coal prices are only likely to head higher, if oil prices rose further, she said, noting also that ongoing Colombian coal sales to Asian destinations are providing something of a floor.

“The arbitrage has narrowed but exports to Asia are still in the money,” she said, adding this could “limit downside”, due to the resulting tightness in Atlantic spot availabilities.

From a technical viewpoint, the Cal 17 contract may still gain some further ground this week, although a slight dip could also be expected, said Tom Høvik, head of Montel’s technical analysis services.

If the market remains above USD 46.50/t in the near term, prices could head towards the USD 47.80/t level, he said.

“[But] a daily close below USD 46.50/t would trigger a move down towards USD 45.60/t, before the market most likely resumes its underlying larger uptrend.”

Prices & Spreads

Coal prices

Latest deal

Previous close

Previous week’s close

API 2 Q3 2016

USD 47.75/t

USD 48.30/t

USD 48.22/t

API 2 Cal 17

USD 46.55/t

USD 46.83/t

USD 45.85/t

Global Coal DES ARA Index

USD 48.34/t

USD 47.85/t


Spreads & BDI

Latest assessment

Previous week

German clean dark spread (Cal-17)*

EUR 0.35/MWh

EUR 0.47/MWh

German clean spark spread (Cal-17)*

EUR –8.55/MWh

EUR -8.45/MWh

Baltic Dry Index (BDI)

625 points

600 points

*Montel assessments

European port coal stock levels as of 23 May, obtained by Montel from the respective terminals (against previous week):
EMO (Rotterdam) – 1.3m tonnes (-0.2m tonnes)
OBA (Amsterdam) – 1.36m tonnes (+0.01m tonnes)
EBS (Rotterdam) – 0.4m tonnes (-0.1m tonnes)
Ovet Vlissingen/Flushing – 0.445m tonnes (-0.035m tonnes), combined thermal and coking
Ovet Terneuzen –  0.17m tonnes (-0.01m tonnes), comprising petcoke, anthracite and coke

There is a public holiday in parts of Germany, Austria and Switzerland on Thursday.


Reporting by:
Laurence Walker
11:58, Monday, 23 May 2016