Montel) European coal fell on Thursday to as much as six-month lows on easing supply concerns as fears of a Colombian miners’ strike waned, mild weather and the knock-on effect of lower Asia-Pacific prices ahead of Chinese New Year.
The API 2 Cal 19 contract plummeted as much as USD 3.45 to USD 77.70/t in early trading, its lowest since 2 October on a rolling front-year basis, although it later recovered to trade last at USD 78.25/t, on Ice Futures.
Closer in on the curve, the March and Q2 contracts were each down around USD 2.50 to levels not seen since early August at USD 81.60/t and USD 80.75/t, respectively.
Traders and analysts agreed an averted strike at Colombian miner Cerrejon, one of Europe’s biggest coal suppliers, weighed heavily, as did sinking prices in the Asia-Pacific region.
Chinese New Year
“The cold spell is waning from NE Asia and China starts preparing for Lunar New Year holidays, [easing] demand in the area. And Colombian workers signed the agreement, mitigating the risk of a strike,” said Diana Bacila senior analyst at Oslo-based Nena.
Next week is the Chinese New Year holiday, when trading activity generally grinds to a halt, with the country’s port operations at a virtual shutdown.
The Ice Newcastle front-year contract was last seen UDS 2.90 lower at UDS 84.10/t, its lowest since late November, while the front month was down USD 3.10 to USD 97/t.
Bacila also cited falling oil prices and a stronger US dollar as both “negative to coal”.
The front-month contract for Brent crude North Sea oil was last seen down USD 0.44 at USD 65.07/bbl.
Mild spell
Mild temperatures were also set to dent coal-fired demand in Europe, said traders, with it due to be up to 2C above normal on the continent next week.
The mild scenario also subdued gas prices, along with the return of the UK’s major Forties pipeline, back online after an outage on Wednesday, said market participants.
The Dutch TTF day-ahead contract was last seen down EUR 0.30 at EUR 17.90/MWh, while the Q2 contract was EUR 0.13 lower at EUR 16.60/MWh.
On the carbon market, meanwhile, the Dec 18 EUA contract was last seen up EUR 0.14 at EUR 9.13/t.
Reporting by:
Andrés Cala
andres@montel.no
17:20, Thursday, 8 February 2018
Editing by:
Robin Newbold
robin@montel.no
17:20, Thursday, 8 February 2018