Monday, 28 Mar 2011
Traders and utilities said that prompt European physical coal prices held steady again on Friday, held up more by strong swaps values than physical demand.
Utility sources said that demand for coal in Europe has shrivelled now that German utilities have bought what they need for the near-term and stockpiles in France, Britain and Scandinavia are fairly high.
A European utility source said that "We're still getting offers of almost every type of coal but there's nowhere to put it even if the discount to API2 drops further and we were tempted to buy.”
Prices of close to USD 130.00 a tonne DES ARA do not reflect the abundance of coal supply in Europe but have been hoisted to that level by strong coal swaps prices.
Traders said that swaps have been reacting more to oil volatility and Middle East unrest plus an improvement in the dark spread the profit to be made from generating using coal as fuel, rather than fundamental factors.
One trader said that "Europe is horrible at the moment. Nobody's buying anything, not even the Scandinavians.”
Low water levels on the Rhine and Danube rivers mean barges carrying coal cannot sail fully loaded. This is also dissuading German buyers from taking more prompt coal at present.
In Asia the market seems to be rebalancing quickly after the initial panic about distressed cargoes as a result of the Japanese earthquake and tsunami. (sourced Thomson Reuters)
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