“There is clearly the potential for lower prices this summer. We see a floor at USD 50/t for physical coal prices delivered in Europe," analyst Diana Bacila told Montel’s fundamental price drivers conference in Oslo.
European coal prices have shed 30% since 2013, with the Q3 API 2 contract last seen at USD 57.30/t, according to the Ice exchange.
Europe’s key suppliers are Colombia and Russia, where production costs currently stood at USD 46/t and USD 56/t, she said, expecting European prices to stay between these levels.
For these producers, weaker local currencies against the US dollar mean coal prices in domestic currency terms were virtually unchanged in Colombia over the past two years, while they have risen 20% in Russia, she said.
The Russian ruble was last seen at 1.0731 against the dollar, some 22% weaker that at the same time last year, while the Colombia peso was nearly 30% weaker, at 2,473.
Meanwhile, European seaborne imports of thermal coal were likely to flatten out at 150m tonnes in 2015, she added.
Reporting by:
Olav Vilnes
olav@montel.no
15:41, Wednesday, 22 April 2015