European thermal coal risen around 7 per cent in past two weeks
By Sarah McFarlane
LONDON, April 20 (Reuters) – European thermal coal consolidated recent gains this week, after being buoyed by broad-based strength across commodities markets.
European cargoes for nearby delivery to Amsterdam, Rotterdam or Antwerp (ARA) last closed at $47.40 a tonne, having risen around 7 percent in the past two weeks.
European API2 coal futures traded down 40 cents to $44.40 a tonne, having recovered some ground since falling to $36.30 in February, the lowest level since May 2003.
Traders said that coal has benefited from a rise in other commodities including oil and copper.
Oil prices have risen by more than 10 percent in the past two weeks as traders anticipated a rebalancing of supply and demand, while supportive economic signals from China have underpinned copper.
“Coal is rallying on short-term money in commodities, coupled with having been oversold versus oil, gas and metals,” a trader said.
“Fundamentals are the same, it’s still oversupplied.”
Going forward ING Bank said mine closures should lead to tightness in the seaborne market, forecasting API coal would rise to $60 per tonne by the end of the year.
Last week leading global coal producer Peabody Energy Corp filed for U.S. bankruptcy protection after a sharp drop in coal prices left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.
In Colombia, the country’s second-largest coal producer Drummond is in talks with unions on labour conditions and benefits.
“The Atlantic basin has tightened quite a bit recently because of an unusually mild start to the spring in most of continental Europe and due to supply trouble in Colombia and Russia,” said a second trader.
Benchmark Australian Newcastle coal last settled at $52.05, having risen around 4 percent since the start of the year.
Glencore and Tohoku Electric Power set an Australian thermal coal import price of $61.60 per tonne, 9 percent below the price it was set at a year ago, although sources said that the traditional benchmark for industry pricing appears to be breaking down.
“These Australian/Japanese supply agreements have in the past been used as a benchmark for prices in the region. Whilst this can be viewed as positive for prices, there is also an element of securing higher-grade coal,” ING Bank said in a commodities note.
(Additional reporting by Henning Gloystein in Singapore, editing by Susan Fenton)