Nena News

END OF DAY – Coal rises on cold snap, restocking

(Montel) European coal prices rose on Tuesday on expectations of increased coal burn during a cold snap next week, with restocking activity adding further bullish influence.

The Cal 19 API 2 contract was last seen up USD 0.94 at USD 76.75/t on Ice Futures, retracing earlier losses after it fell to USD 75.15/t, its lowest level since 12 February. The Q2 contract climbed USD 1.17 to USD 82.50/t.

“The uptick in prices could be a result of higher coal use expected with the cold spell next week and higher gas prices, since coal remains more competitive in [the power sector],” said Diana Bacila, senior analyst at Oslo-based Nena.

Temperatures will drop to 7-10C below normal across Europe this weekend, rising only “slightly” from next week, according to data from Swedish forecasting service SMHI.

Bacila also attributed the price rise to coal restocking on the continent after inventories fell due to high coal-fired electricity generation during the previous cold snap in February and at the beginning of March.

Combined coal stocks at Amsterdam, Rotterdam and Antwerp (ARA) dry bulk terminals dropped on Monday to a one-month low of 4.2m tonnes, down 10% year on year.

The market could be “trading on technical” signals, said Alfa Energy analyst Wayne Bryan, noting global supply was “robust” and both Chinese coal production and coastal stocks were rising.

“We might see an uptick in demand [for] mid-March, when the cold spell arrives. However, [there is] such slackness in the market [that] I don’t see much risk for any significant upside,” he said.

On the physical market, an April-loading DES ARA cargo traded at USD 81.75/t in the current session, almost flat compared to the previous trade seen.

Carbon highs
European carbon prices extended Monday’s 6.5-year highs on strong buying momentum.

The Dec 18 EUA contract hit an intraday high of EUR 11.50/t on Tuesday, the highest since 23 September 2011, yet prices have since slipped to EUR 11.47/t, still up EUR 0.39 from Monday’s close. 

Continental and UK gas contracts dropped across the curve, despite weather forecasts confirming a looming return to cold weather. 

In the UK, the day-ahead gas contract was seen last down 3.30p to 66.20p/th, while the front-month contract slipped 1.30p to 52.70p/th.

The Dutch TTF equivalent dropped EUR 1.73 to a last trade of EUR 24.90/MWh, and the April contract slipped EUR 0.38 to EUR 19.45/MWh.

Reporting by:
Pablo Bronte
16:00, Tuesday, 13 March 2018