Nena News

COAL OUTLOOK – Front month to remain supported

(Montel) European prompt coal prices may extend one-month highs this week amid lingering restocking and generation demand in both Europe and the Pacific basin, participants said on Monday.

The API 2 September contract traded last up USD 0.35 at USD 99.55/t, after earlier reaching its highest since 19 July, of USD 99.60/t.

Further along the curve, the front year slipped USD 0.20 to USD 89.25/t, on Ice Futures.

“Europe needs to restock, as demand over the summer has been strong,” said Diana Bacila, senior analyst at Oslo-based Nena, pointing to low renewable power generation levels.

There has been a persisting call on coal-fired units in recent weeks, due to low wind power output, but also thanks to improved generation margins compared with gas, participants said late last week.

Yet deliveries to inland power plants from the main Amsterdam, Rotterdam and Antwerp (ARA) coal import hubs have been hindered by low river levels, which mean operators have had to reduce loaded volumes, while charging a “low water premium” for lost euro-per-tonne earnings.

But this did not appear to have dampened demand, with a source at one dry bulk terminal noting while barge shipments to inland power plants had slowed, utilities were still attempting to withdraw coal from stock.

“There are some [enquiries] for reloading into trains,” he said.

Combined stocks at four key terminals were down nearly 3% on the week, at a three-week low of 5.45m tonnes.

Meanwhile, Asia-Pacific basin demand was still likely to be playing a role in supporting prompt prices, said Bacila, in particular citing restocking demand from South Korea and Japan, accentuated by high LNG prices encouraging generators to favour coal.

“It’s less likely to be China now, as China is entering its peak season for hydropower, which puts some weight on import demand, and inventories at plants are quite strong”.

Technical signals were somewhat bullish in the short-to-medium term, with the Cal 19 API 2 contract likely to test the USD 90.60-93/t resistance area over the coming days, said Montel’s technical analyst Tom Hovik.

Prices & Spreads

Coal prices

Latest trade

Previous close

Previous week’s close

API 2 Q4 2018


USD 96.90/t

USD 94.10/t

API 2 Cal 19

USD 89.25/t

USD 89.45/t

USD 87.18/t

Global Coal DES ARA Index

USD 99.38/t

USD 96.20/t

Spreads & BDI

Latest assessment

Previous week

German clean dark spread (Cal-19)

EUR -0.15/MWh

EUR -2.90/MWh

German clean spark spread (Cal-19)

EUR 3.55/MWh

EUR 2.90/MWh

Baltic Dry Index (BDI)

1,723 points

1,691 points

European port coal stock levels as of 20 August, obtained from the respective terminals (against previous week):
EMO (Rotterdam) – 3.4m tonnes (-0.1m tonnes)
OBA (Amsterdam) – 1.6m tonnes (unchanged)
EBS (Rotterdam) – 0.125m tonnes (-0.01m tonnes)
Ovet Vlissingen/Flushing – 0.325m tonnes (-0.045m tonnes)
Ovet Terneuzen – 0.22m tonnes (0.045m tonnes)


Reporting by:
Laurence Walker
13:19, Monday, 20 August 2018