Nena News

END OF DAY – Coal edges higher amid thin trading

(Montel) European coal prices climbed back above their average range of the past 200 days on Monday amid lacklustre trading activity in fuel markets due to a public holiday in the UK. 

Paper prices for 2018 coal deliveries to north-western Europe rose USD 0.22 to USD 66.60/t on London’s Ice exchange.

The front-year contract remains USD 0.78 below where it closed last Monday however, as a combination of weather-related factors and Russian rail maintenance helped support prices, said analyst Diana Bacila at Nena.

Forecasts of above average temperatures for June in China have pushed up local prices in the world’s largest coal consumer, which has a knock on effect on other seaborne-coal markets, she said.

In addition, the risk of a hot summer in Europe this year has heightened the potential for increased demand for cooling and raised the risk of reduced hydro and nuclear generation, she added.

Europe was covering its needs with mostly Russian and Colombian imports, but any demand spikes or disruptions to Russian deliveries would need to be met by more expensive US imports.

“US coal is not pricing in Europe,” Bacila said, highlighting a potential for API 2 gains in the order of USD 3-4/t judging by US east coast prices.

“If all the weather risks don’t pan out, then of course there is more downside potential,” she added.

There was potentially greater Colombian availability now that the risk of rainfall disruptions had abated.

Carbon touches 2-month high
Carbon traded in a tight range on Monday amid thin activity and a lack of fresh supply injections from auctions. 

The benchmark Dec17 contract last traded EUR 0.01 below its previous close at EUR 5.18/t, after initially edging out the previous session’s gains to reach a two month high of EUR 5.21/t.

Just 3.1m tonnes of Dec17 allowances changed hands on the Ice exchange, compared to 8.4m tonnes on Friday. Monday also saw no auctions, extending a slump in fresh injections following last week’s relatively tight auction supply of 13.5m allowances.

By comparison, 22.3m allowances were auctioned in the week starting 8 May when carbon prices sank to their lowest levels so far this year at EUR 4.29/t.

In other markets, spot prices for gas on Europe’s most liquid hub, TTF in the Netherlands, climbed EUR 0.21 to EUR 15.30/MWh.

Brent crude oil was also up marginally at USD 52.20/bbl as it continued to pull away from Friday intraday dip to USD 50.71/bbl.

Reporting by:
Nathan Witkop
17:16, Monday, 29 May 2017