Nena News

COAL OUTLOOK – European prices eye further gains

(Montel) European coal prices are likely to rise further this week on the back of a still strong Asia-Pacific market and supportive technical signals, participants said on Monday.

The API 2 Q3 traded last up USD 0.25 at USD 93.80/t, while the Cal 19 was USD 0.73 higher at USD 85.25/t.

On the physical market, the Global Coal Des ARA index was assessed last at a one-month high of USD 97.43/t.

“The strength seems to be from the east [with] the Q3 Newcastle contract outpacing the API 2 [equivalent] today,” said an analyst with a European trading firm.

The Pacific benchmark Newcastle Q3 contract gained USD 0.70 to USD 107.95/t in early trading, widening an already significant premium of more than USD 14 over the corresponding API 2 price.

Traders are generally reluctant to allow the Newcastle-API 2 spread to widen to such an extent.

The supply demand balance was “relatively tight” in the seaborne market amid still strong import demand in China and India, said Diana Bacila, senior analyst at Oslo-based Nena.

“Cooling demand is very strong in China, where a heatwave is spreading fast with temperatures of up to 40C,” she said, adding while hydropower output was on the rise, it was still below last year’s levels.

Consultancy Wood Mackenzie said China’s benchmark Qinhuangdao port price could still rise to as much as USD 107/t (CNY 700/t) this month, from current levels of around USD 104/t.

“Thermal coal prices have been buoyed by rapidly growing power generation, which will bolster further thermal coal demand for June,” it said.

European support
But there was also some potential support in the Atlantic basin, said Nena’s Bacila.

“The coal burn in Europe is expected to rise in Germany this week, due to low wind power output,” she said.

German day-ahead power prices jumped almost EUR 4 early in the current session, with forecasts showing wind output to halve to 3 GW on Tuesday, Montel reported.

From a technical viewpoint, should the API 2 Cal 19 contract close above USD 85.60/t this week, this could pave the way for a rise back above USD 90/t, said Tom Hovik, head of technical analysis at Montel.

“But if the market closes below the strong USD 83.85-84.10/t support level, there is a risk of dropping to the UD 77-79/t area, before potentially rising back towards USD 90/t again”.

Prices & Spreads

Coal prices

Latest trade

Previous close

Previous week’s close

API 2 Q3 2018

USD 93.80/t

USD 93.55/t

USD 96.95/t

API 2 Cal 19

USD 85.25/t

USD 84.52/t

USD 88.60/t

Global Coal DES ARA Index

USD 97.43/t

USD 97.17/t

Spreads & BDI

Latest assessment

Previous week

German clean dark spread (Cal-19)

EUR -1.05/MWh

EUR -1.50/MWh

German clean spark spread (Cal-19)

EUR 2.05/MWh

EUR 2.55/MWh

Baltic Dry Index (BDI)

1,341 points

1,445 points


European port coal stock levels as of 25 June, obtained from the respective terminals (against previous week):
EMO (Rotterdam) – 3.5m tonnes (-0.1m tonnes)
OBA (Amsterdam) – To be added later
EBS (Rotterdam) – 0.175m tonnes (-0.02m tonnes)
Ovet Vlissingen/Flushing – 0.35m tonnes (unchanged)
Ovet Terneuzen – 0.175m tonnes (+0.035m tonnes)


Reporting by:
Laurence Walker
13:00, Monday, 25 June 2018