Reuters reported that physical thermal coal prices in Europe remained subdued on Thursday as the Atlantic basin returned to surplus following the end of a strike in Colombia earlier in August.
A South African Richards Bay cargo for delivery in October traded at USD 87.25 a tonne on the GLOBALcoal trading platform and November was offered at USD 88.75.
No European DES ARA contracts traded, but September was offered at USD 90.25 while November was offered at USD 92.50 per tonne.
Coal prices have been declining for much of the first half of the year as weak demand clashed with rising exports from the United States, where coal fired electricity generation has become unprofitable as a result of the shale gas boom in North America.
Colombian production dipped in late July and early August as a rail strike prevented coal from inland mines from being transported to export terminals along the coast. As a result of the strike, the Atlantic basin saw a supply squeeze but following the end of the dispute two weeks ago, the Atlantic is expected to return into surplus by the end of this week.
BarCap said that it expected a slight surplus for the remainder of the year and 2013, The bank said in a research note on Thursday that 2012's import demands of 837 million tonnes would be met by available exports of 843 million tonnes, while 2013 would see import needs of 849 million tonnes met by 850 million tonnes ready for export.
It said “Coal pricing remains subdued, with weaker demand growth from Chinese steel and power producers, coupled with healthy supply increments from traditional exporters and the U.S., leaving the seaborne market well supplied.”
The healthy coal exports mean that BarCap expects prices to drop, with API2 (European) prices to average USD 94 per tonne in 2012, and USD 92 a tonne in 2013. South African API4 prices were expected to fall from an average of USD 95 to USD 94 a tonne between 2012 and 2013, while Australian Newcastle coal prices would see a an annual average decline from USD 99 a tonne to USD 97 per tonne.
Despite healthy coal demand in Europe and Asia, BarCap said that "the story of the market has been supply, with most exporters able to increase production and U.S. volumes becoming more available."
Source - Reuters
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