(Montel) European coal prices may rise further this week amid a slight tightness in Asian spot supply, although high stock levels are likely to cap gains, participants said on Monday.
“In general, we’re not very positive on coal, although we do see some tightness in Asia, which is probably giving support to European prices,” said Hans Gunnar Nåvik, coal and freight analyst with Oslo-based consultancy Nena.
“But I don’t see any strong upside, as I think the market is pretty solid on the supply side,” Nåvik said.
A reputed shortness in prompt-loading Australian (Newcastle) coal offers contributed to a 3% week-on-week rise in the Global Coal Newcastle index – last assessed at USD 61.24/t, the highest level since early May.
High stocks
Still, stocks at four key north-west European coal hubs have reached a seven-month high of 6.26m tonnes (see Stocks section).
“It would make sense to have high stocks in November, coming into winter, but it seems a bit strange in June,” said a UK-based head coal trader, noting this could in part reflect lower-than-expected rates of withdrawal.
“Maybe we will see some small upside in Europe still, as low levels of wind are expected this week, but I doubt there is room to go much higher,” said a Finnish coal trader, adding he would be “surprised” if the Cal 16 API 2 contract rose to USD 60/t.
Swedish forecaster SMHI cited “mostly low wind production” in Europe, falling further over the course of the coming week.
“In the short-term, there may be more market gains, but in the longer-term, there is no fundamental support for prices,” said a Polish coal trader, adding “on the contrary, as we enter the summer period… prices will come down again”.
Prices & Spreads
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Coal prices
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Latest deal
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Previous close
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Previous week’s close
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API 2 Q3 2015
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n/a
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USD 58.90/t
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USD 58.95/t
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API 2 Cal 16
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n/a
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USD 58.70/t
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USD 58.40/t
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Global Coal DES ARA Index
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USD 58.91/t
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USD 57.68/t
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Spreads & BDI
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Latest assessment
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Previous week
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German clean dark spread (Cal-16)*
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EUR 2.10/MWh
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EUR 1.75/MWh
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German clean spark spread (Cal-16)*
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EUR –14.65/MWh
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EUR -14.35/MWh
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Baltic Dry Index (BDI)
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779 points
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642 points
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*Montel assessments
Stocks
European port coal stock levels as of 22 June, obtained by Montel from the respective terminals (against previous week):
EMO (Rotterdam) – 2.3m tonnes (+0.1m tonnes)
OBA (Amsterdam) – 2.7m tonnes (+0.05m tonnes)
EBS (Rotterdam) – 0.8m tonnes (unchanged)
EECV (Rotterdam) – To be added later
Ovet Vlissingen/Flushing – 0.456m tonnes (-0.089m tonnes), combined thermal and coking
Ovet Terneuzen – 0.252m tonnes (-0.004m tonnes), comprising petcoke, anthracite and coke
Rivers & Transportation
Water levels across most of Germany were as much as, or more than, 50% below seasonal norms, although some river sections in the south – including on the Isar, Danube and lower Rhine – remained up to, or more than, 50% above usual, according to forecaster Wetter Online.
Levels at the country’s main indication point of Kaub, on the Rhine, were forecast to fall somewhat from current levels of 261cm to 245m later by Friday, government data shows.