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Atlantic basin coal faces further losses on strong supply

Source: montel, November 6, 2019
Atlantic basin coal prices face further losses this week as a regional supply glut, weak utility demand and bearish signals from China keep pressure on the market.

The front-quarter API 2 contract traded last down USD 0.55 from Friday’s close at USD 59.90/t, while the Cal 20 was USD 0.79 lower at USD 63.65/t, on Ice Futures.

“The market fails to see any spark for now,” said a coal analyst with a European energy provider, pointing in part to high port stocks.

“The European coal burn may pick up this week, on lower wind power output in Germany, but the support for API 2 will be rather limited by lower gas prices,” she said.

Combined inventory levels at four key northwest European import terminals were seen this morning at 6.9m tonnes, down marginally on the week but still in line with levels at the same time last year.

Just two coal-laden vessels were scheduled to arrive at Rotterdam’s EMO terminal this week, port schedules show.

“It’s quiet on all fronts – unloading, loading and reloading [onto barges],” said a contact at one terminal.

“Not much has changed on the fundamentals,” said a coal analyst with a Nordic energy firm, adding she was “surprised” API 2 prices had not responded to the looming threat of strike action at mines in South Africa.

Montel reported on Thursday workers at Glencore’s South African coal-mining operations were threatening to strike over worker rights and living conditions.

Asia bears

Meanwhile, there were some bearish signals from the Asia-Pacific region, with reports emerging over the weekend that China had further tightened its restrictions on imports.

The country would only allow coal to be imported via ports serving the material’s specified “customs region” destination, thereby preventing importers from switching to alternative import hubs when a port reaches its annual import quota or otherwise limits imports, participants said.

“In any normal market, this would be very bearish,” said a coal analyst with a Geneva trading house.

But a source with a Singapore-based trading firm said it remained unclear to what extent the rules would be adhered to.

“With China, you never know,” he said.


European coal terminal stock levels as of 4 November, obtained from the respective terminals (against previous week):

EMO (Rotterdam) – 3.8m tonnes (0.1m tonnes)

OBA (Amsterdam) – 2.45m tonnes (-0.1m tonnes)

EBS (Rotterdam) – 0.36m tonnes (-0.065m tonnes)

Ovet Vlissingen/Flushing – 0.315m tonnes (-0.02m tonnes)

Ovet Terneuzen – 0.24m tonnes (-0.02m tonnes)
News Source: Montel