Nena News

COAL OUTLOOK – API 2 prices face further downside

(Montel) European paper coal prices were set to come under further pressure this week amid increased supply in the Atlantic, weaker generation demand and falling Asian prices, market participants said on Monday.

The front-quarter API 2 contract fell USD 0.13 in early trading to USD 83.10/t, while the Cal 17 was down by a more pronounced USD 1.33 to USD 72.70/t, on Ice Futures.

On the physical market, the Global Coal Des ARA index was last assessed at USD 90.68/t, up 6.3% on the week and the highest level since February 2013.

“It seems the market is more in balance in the Atlantic,” said Diana Bacila, senior analyst at Oslo-based Nena, adding recent high prices could have encouraged US sellers to place more coal into the European market.

“Also, prices in the Pacific have been declining, which means Colombian coal has lost its competitiveness in Asia,” she said, adding this could result in more coal earmarked for the Pacific basin.

The Global Coal Newcastle index has declined for the past three sessions, after hitting a multi-year peak of USD 113.04/t on Tuesday.

At the same time, the prospect of milder weather and higher wind power generation levels in Europe was likely to hit coal-fired generation levels, Bacila said.

There will be a “rapid change into very mild, windy and also rather wet weather” over the coming 10 days, according to forecaster SMHI, noting temperatures could rise to as much as 5C above normal this week.

From a technical viewpoint, the Cal 17 contract was likely to lose further ground in the near term, said Tom Høvik, head of Montel’s technical analysis services.

“After seeing a new high last week at USD 78.75/t, the close on Friday below USD 76.30/t issued a sell signal for the coming week, indicating a move towards USD 69-70/t,” he said, adding prices could then rebound back to above USD 78.75/t.

Prices & Spreads

Coal prices

Latest deal

Previous close

Previous week’s close

API 2 Q1 2017

USD 83.10/t

USD 83.23/t

USD 83.75/t

API 2 Cal 17

USD 72.70/t

USD 74.03/t

USD 76.60/t

Global Coal DES ARA Index

USD 90.68/t

USD 85.33/t


Spreads & BDI

Latest assessment

Previous week

German clean dark spread (Cal-17)*

EUR -0.88/MWh

EUR -0.03/MWh

German clean spark spread (Cal-17)*

EUR –2.96/MWh

EUR -1.81/MWh

Baltic Dry Index (BDI)

1,045 points

855 points

*Montel assessments

European port coal stock levels as of 14 November, obtained by Montel from the respective terminals (against previous week):
EMO (Rotterdam) – 1.8m tonnes (-0.5m tonnes)
OBA (Amsterdam) – 1.8m tonnes (unchanged)
EBS (Rotterdam) – 0.16m tonnes (-0.04m tonnes)
Ovet Vlissingen/Flushing – 0.39m tonnes (-0.005m tonnes), combined thermal and coking
Ovet Terneuzen – 0.22m tonnes (0.005m tonnes), comprising petcoke, anthracite and coke

There is a coal conference in Manila on Thursday-Friday. Montel will hold its Warsaw Market Insightsevent on Thursday.

Reporting by:
Laurence Walker
12:47, Monday, 14 November 2016