Euro Coal-Futures rise, fail to break $130/mt

Thu Jul 7, 2011

* Gas, power outperform coal
* German dark spread rises to 16-month high

LONDON, July 7 (Reuters) - European coal futures made slight gains on Thursday but underperformed relative to power and gas.

The API2 2012 coal contract opened at $129 a tonne and rose 40 cents to around $129.40 a tonne at 1420 GMT.

Unlike its equivalent benchmarks in the power and gas sector - which saw German 2012 baseload (24 hours delivery) power rise above 58 euros per megawatt-hour (MWh) and the UK's NBP Winter 2011 gas contract break through 72 pence per thermn - API2 2012 coal failed to reach or break through the $130 marker.

The coal market's underperformance relative to power and gas meant that it became more profitable for European utilities to generate electricity from coal.

The German 2012 baseload clean dark spread rose to 9 euros a MWh on Thursday, its highest level since Q1 2010.

The rise also meant that coal's premium over gas power generation rose to more than 11 euros per MWh, its highest since the switching of 2008 on 2009.

On the supply side, South Africa's Chamber of Mines said on Thursday that three unions representing employees in the coal mining sector have declared a dispute over wages.

"The decision to declare a dispute followed the Chamber's request that unions consider withdrawing some of the demands which had significant cost implications so that the coal mining companies could devote available resources to wages," it said in a brief statement.

The Chamber of Mines is negotiating on behalf of several coal miners, including Anglo Thermal Coal SA , Exxaro , Optimum Coal and Xstrata Coal (By Reuters)