Nena News

COAL OUTLOOK – Strikes, Asia demand support prices

(Montel) European coal prices are likely to derive support from an ongoing miners’ strike in South African and bullish Asia-Pacific prices, yet regional demand remains largely muted, participants said on Monday.

The rolling front-year API 2 contract was last seen up USD 0.20 from Friday’s close at USD 82.60/t – after initially dropping to USD 81.90/t – on Ice Futures.

But it was still 2% lower than Thursday’s 3.5-year high of USD 84.25/t.

On the physical market, the Global Coal Des ARA index rose 2.5% week on week to USD 91.53/t.

There was lingering unease regarding a salary dispute between South African miners and Exxaro Coal, which has resulted in strike action by workers at two of its mines since Thursday.

While a majority of the output is consumed by local generators, there are concerns that export volumes will be diverted onto the domestic market to compensate for the supply shortfall.

“Exxaro continued negotiations with the mining union on Friday, which has given the company a set of revised demands. This might indicate an agreement is underway but remains to be seen for now,” said Diana Bacila, senior analyst at Oslo-based Nena

“The shoulder season may offer some relief to prices, if the strikes get resolved but some bullish drivers remain for now in the Pacific,” Bacila said.

Indeed, the front-year Newcastle (Australia) contract remained close to Thursday’s four-year high of USD 88.15/t, closing on Friday at USD 86.74/t – up 2% on the week – on Ice.

China – along with other Asia-Pacific consumers – have relatively low levels of supply, which require replenishing ahead of the winter demand season.

From a technical viewpoint, the Cal 18 API 2 contract was unlikely to make any significant gains or losses in the near term, said Tom Høvik, head of Montel’s technical analysis services.

“Historically, after such an extremely volatile week as we saw last week, there is some kind of consolidation for the first two or three days, before the market finds its path,” he said, adding it would then, most likely, renew the broader upward trend.

Prices & Spreads

Coal prices

Latest deal

Previous close

Previous week’s close

API 2 Q4 2017


USD 91.32/t

USD 87.72/t

API 2 Cal 18

USD 82.60/t

USD 82.40/t

USD 80.65/t

Global Coal DES ARA Index

USD 91.53/t

USD 89.29/t


Spreads & BDI

Latest assessment

Previous week

German clean dark spread (Cal-18)*

EUR 2.55/MWh

EUR 2.80/MWh

German clean spark spread (Cal-18)*

EUR 4.05/MWh

EUR 3.60/MWh

Baltic Dry Index (BDI)

1,385 points

1,332 points

*Montel assessments

European port coal stock levels as of 18 September, obtained by Montel from the respective terminals (against previous week):
EMO (Rotterdam) – 2.4m tonnes (-0.1m tonnes)
OBA (Amsterdam) – 1.75m tonnes (-0.1m tonnes)
EBS (Rotterdam) – 0.3m tonnes (+0.085m tonnes)
Ovet Vlissingen/Flushing – 0.28m tonnes (-0.06m tonnes), combined thermal and coking
Ovet Terneuzen – 0.11m (+0.015m tonnes), comprising petcoke, anthracite and coke

Reporting by:
Laurence Walker
12:21, Monday, 18 September 2017