Argus quoted according to traders, Spanish coal imports could rise by as much as 50pc on the year in 2012 as the country diversifies its suppliers.

A trader said “Imports so far are on track to be higher than last year. “All utilities have high coal burn.”

Expensive gas prices and low hydro generation have boosted demand for coal-fired generation this year and traders expect this trend to continue in the second half of 2012 and into next year.

One trader said “If domestic coal production drops out, that means Spain could be importing 3 million tonnes to4 million tonnes more in 2013 to fill that gap.”

A trader from another utility told Argus that Spain imported around 10mn t of coal last year. Its imports have traditionally come mostly from South Africa and Russia with some plants burning Indonesian coal. But utilities are this year testing out different types from the US, Colombia and Australia.

Most coal is bought on a fob basis, except for some contracts with Russian producers. Coal from Colombia is generally bought at the API 2 index price minus C7 freight rates.

Spanish coal burn has been high this year, according to data from grid operator Red Electrica. Coal has been used to generate 27.7TWh of electricity so far this year, compared with 16.6TWh in the same period last year. And coal has increased its share of Spanish power generation to 19.5pc this year from 11pc a year earlier. Spain has generated around 5TWh from coal this month up by 83pc on the year.

Source - argusmedia.com

(www.coalguru.com)