Nena News

END OF DAY – Prompt coal hits 3-year low

(Montel) European prompt coal prices hit fresh three-year lows on Friday, as slack demand and a weaker energy complex weighed heavily on the market.

The front-month API 2 coal contract traded last USD 1.10 down at USD 51/t, after hitting USD 50.75/t earlier, while the front quarter slid USD 0.75 to USD 53.25/t, after reaching USD 52.70/t, both at their lowest level since June 2016, on Ice futures.

“The main driver at the moment is low demand,” said an analyst with a coal supplier, pointing to a utility preference for cheaper gas.

The Dutch gas TTF July contract was last down EUR 0.10 at EUR 11.23/MWh, while the equivalent UK NBP contract was down 0.38p lower at 27.90p/th, exchange data showed.

Coal prices also took direction from the wider energy complex, which was tracking earlier losses on the oil market, said a commodity trader with a UK firm.

Although, the front-month contract for Brent crude North Sea oil was last seen up USD 0.52 at USD 61.87/bbl, it was still below the USD 62.64/bbl level reached on Thursday, following reports of attacks on two oil tankers in the Gulf of Oman.

International Energy Agency forecasts in the current session of lower oil demand growth had in part offset the previous session’s bullish sentiment, a European commodity trader said.

Close to a floor?
Yet, despite persisting oversupply and little sign of any pick-up in demand, analysts said coal prices were likely close to a floor.

“Prices are so low that miners may [cut production],” said Hans Gunnar Nåvik, senior analyst with Oslo-based StormGeo, adding, however, there would be something of a “dogfight” between producers, as they attempt to “outlast” each other.

Others agreed, with an analyst from a European trading firm noting prices had dropped to – or below – the cost of shipping coal to Europe for the US, Russia and some Colombian material.

“Hence, we are looking for signs of producers reducing supply,” he said. “If they do, it should form a bottom [for prices], but if they don’t, further downside is likely given probable ongoing increase in stocks,” he added.

Nevertheless, there was unlikely to be any immediate price rebound, participants said.

In carbon trading, the Dec 19 EUA contract was last seen at EUR 24.96/t, on Ice futures.

“The market has lost a lot of momentum. People aren’t talking about prices of EUR 35-40/t anymore,” a trader told Montel earlier.
 

Reporting by:
Pablo Bronte
pablo@montelnews.com
16:41, Friday, 14 June 2019