Nena News

END OF DAY – Coal falls as market shrugs off strike concerns

(Montel) European coal contracts fell in late Tuesday trading amid weak regional demand, with traders shrugging off concerns that South Africa’s mining sector could experience widespread strike action from Wednesday.

The December API 2 contract rose USD 0.55 to USD 93.25/t, while the Q1 contract was USD 0.70 lower at USD 89.80/t, on Ice Futures.

Further along the curve, the Cal 18 contract was down USD 0.40 to USD 86.05/t.

“Coal markets have started the week on a subdued tone as both physical and paper markets struggled for liquidity,” said a broker in a note.

No cargoes for delivery in northwest Europe have traded via broker Global Coal so far this month, while port stock levels were relatively comfortable, at around six-month highs.

But the threat of supply disruptions limited losses.

“Upside potential is still present and revolves around the risk of supply disruptions driven by the potential strike in South Africa, expected to be announced this week,” said Diana Bacila, a senior analyst at Oslo-based Nena.

Up to 30,000 South African coal mineworkers could take strike action from Wednesday if salary demands are not met by the country’s Chamber of Mines, Montel reported earlier.

“[Furthermore] European coal consumption is expected to pick up this week due to lower renewables,” Bacila said.

Indeed, German average wind generation is expected to drop from 5.4 GW in the current session to 2.9 GW on Wednesday, according to analyst and TSO views collated by Montel.

And solar production during peakload hours should drop further from 3 GW in the current session to 1.7 GW on Wednesday.

Carbon jitters
On the carbon market, the Dec 17 EUA contract eased EUR 0.15 on the day to EUR 7.77/t, after earlier rising to a three-week high of EUR 8.02/t.

The market was awaiting clearer direction from EU ETS reform talks scheduled for Wednesday.

Co-legislators will meet to complete negotiations over the reform of the EU ETS post 2020, with a final agreement widely considered to rest on resolution of one issue.

Nearby UK gas prices rose to fresh nine-month highs amid falling temperatures across the country.

The within-day NBP contract hit its highest level since February, of EUR 51.50/t, but was last seen down 0.40p on the day at 50.50p/th, broker data showed.

The day-ahead Dutch TTF contract traded up EUR 0.28 at EUR 19.20/MWh and the December contract was also EUR 0.28 higher at EUR 19.18/MWh.

The front-month contract for Brent crude North Sea oil traded down USD 0.44 to USD 63.83/bbl, on Ice Futures.


Reporting by:
Laurence Walker
17:12, Tuesday, 7 November 2017