Euro Coal-Prices dip, UK burn hits 6-year high
* Coal accounted for 46 pct of Q1 UK generation
* China seen buying while prices are low - analysts
LONDON May 31 (Reuters) - European prompt physical coal prices dipped by around 50 U.S. cents a tonne on Thursday while the market continued to seek clear direction on the short-term outlook.
Stockpiles remained high in Amsterdam-Rotterdam-Antwerp, Europe's main import hub despite strong consumption in Germany, the UK and Spain.
Coal accounted for 46 percent of Britain's power production in Q1, a six-year high share, the UK Energy Ministry said on Thursday, because coal has been far cheaper a fuel than gas for the past several months.
But utility buying of prompt coal has been minimal and usually only when it has been possible to buy cheap nearby cargoes and sell forward, utilities said.
"Macro factors look bearish for the end of the year and beyond and that's pulled down forward prices by around $1.00 with less of a fall in prompt prices," one utility source said.
But the main price-driver and focus of the market's attention and concern remains China and to a lesser extent, India.
Even Chinese counterparties until now regarded as first class and unlikely to break contracts have been insisting on re-negotiating contracts agreed at higher prices, suppliers said.
This is expected to continue for the next couple of months but fresh Chinese buying at current spot prices has encouraged some players to expect continued strong monthly imports even if price-wrangling continues.
"China's thermal coal imports are set to be the highest ever this year at 210-220 million tonnes," Jim Lennon, analyst with Macquarie said.
China is more likely to buy fresh imported coal in the coming months while prices remain depressed, Commerzbank said in a research note on Thursday.
"One factor in favour of rising (Chinese) imports is the enormous price advantage, which has emerged due to the decline in prices on the international markets," Commerzbank said.
"Chinese have often taken these advantages to build up inventories."
An August DES ARA cargo was bid at $88.50 and offered at $89.50, down 50 cents.
A June South African cargo was bid at $89.00 and offered at $89.75, little changed.
A July South African cargo was bid at $90.10, down 90 cents. (Reporting by Jacqueline Cowhig, editing by William Hardy)