Demand for physical coal in Europe is still low, with prices falling and liquidity thin. But there are signs of a recovery as the contango in the API 2 curve steepens. The calendar was trading at over a USD 6.50 per tonne premium to the prompt today, as traders sold at the front of the curve, where demand is low, and bought further out.
Traders said that European utilities need to restock, with the latest UK figures showing inventories at a three-year low. Restocking by German utilities could be restricted in the short term because of low Rhine water levels, Bank of America Merrill Lynch said, although it expects higher imports later this year. Power demand in UK, Spain and Italy has been “shockingly low” so far this year because of above-average temperatures, but this is expected to change.
Participants at the McCloskey Coal Outlook conference said that Germany will have to increase coal-fired production by about 20pc, or 21.6TWh, this summer, economic research institute DIW forecasts. There has been no indication so far of a significant increase in coal or gas-fired production.
Traders said that European utilities need to restock, with the latest UK figures showing inventories at a three-year low. Restocking by German utilities could be restricted in the short term because of low Rhine water levels, Bank of America Merrill Lynch said, although it expects higher imports later this year. Power demand in UK, Spain and Italy has been “shockingly low” so far this year because of above-average temperatures, but this is expected to change.
Participants at the McCloskey Coal Outlook conference said that Germany will have to increase coal-fired production by about 20pc, or 21.6TWh, this summer, economic research institute DIW forecasts. There has been no indication so far of a significant increase in coal or gas-fired production.
(sourced from Argus Media)
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