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European physical coal tops USD 100/t on supply concerns

CharbonFret

09 Jun 2021 10:45

Photo: Shutterstock.com

Photo: Shutterstock.com

London

09 Jun 2021 10:45

(Montel) European physical coal prices have surged 11% over the past week to break above USD 100/t on Wednesday for the first time since 2018 on lingering supply concerns and strong Pacific demand.

Broker Global Coal’s Des ARA index – which reflects the cost of coal delivered to Amsterdam, Rotterdam or Antwerp (ARA) – was assessed last at USD 100.50/t, more than double its value a year ago and its highest since October 2018.

A London-based physical coal broker said trading activity in the current session was “pretty quiet”, noting demand for physical spot cargoes had not been particularly strong.

“It’s been tracking paper really,” he said, with the front-quarter API 2 contract also hitting its highest level since October 2018 in the current session of USD 101.75/t.

The broker said the bid-offer balance was “fairly even”, pointing to ample stocks at Amsterdam, Rotterdam and Antwerp (ARA) import terminals, which this week reached their highest levels since mid-November, of 4.78m tonnes.

However, a source with a Russian supplier said there was some underlying fundamental support, notably from ongoing high demand from China and Taiwan, still-limited Colombian supply and some limitations to Russian output.

“Russia is having problems, so availability isn’t great,” he said, adding “we would like to close more deals at current prices, but railway bottlenecks [between Russian mines and ports] are an issue.”

Colombian disruptions
Meanwhile, the lifting late last week of a recent rail blockade in Colombia, which had halted railings between the country’s key Cerrejon coal-mining complex and its export port for around a month, had eased some concerns about supply.

But it would still take some time for vessels loading at present to arrive at their destinations, thereby having a lingering impact on supply over the coming couple of weeks.

A source close to Cerrejon told Montel three vessels had loaded at the firm’s Puerto Bolivar export terminal since the main rail blockade ended. “One is loading now and five more are in the queue. Everything is going smoothly,” he said.

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