Euro coal prices dip with oil and utility selling

Wednesday, 11 Jan 2012

Reuters reported that prompt European physical coal prices fell by USD 1 to USD 2 per tonne on Monday in line with weaker oil, as some smaller European utilities started to sell cargoes they would not need due to the mild winter.

Last week the market appeared to have steadied and tight near-term supply of South African coal boosted prices which had slipped during the Christmas and New Year holidays. February South African prices saw a lesser fall of around 50 cents because supply for the first quarter remains tight but there was less visible interest from India for prompt cargoes out of Richards Bay.

One utility source said "The market's looking a bit more bearish because in Europe there been lower coal burn than expected, the winter been mild, it's wet and windy but not cold, China won't be back until the end of January and the shorts seem to have covered."

European trader said "Prices were slightly higher in the morning but have followed oil down.

Ms Emmanuel Fages analyst with Societe Generale said "Coal prices are very clearly linked to oil now."

Traders, utilities and analysts said prices may not slip much further, but unless there is a significant supply disruption such as floods in Australia, fundamentals look weaker than they did a year ago.

They said a trade on Monday morning for a March delivery DES ARA cargo at USD 109.00 a tonne down over USD 1.00 from Friday levels was a bearish sign.

(Sourced from Reuters)