Euro Coal-Physical prices up on Colombian troubles
LONDON Feb 7 (Reuters) - Prices for coal delivered into northwestern Europe moved up slightly on Thursday as did near-term swaps on concerns about supply from Colombia, the world's fourth-biggest exporter.
European coal into Amsterdam/Rotterdam/Antwerp (DES ARA) for delivery in April was bid at $87.70 for February cargoes, compared with a previous settlement of $86.60 a tonne.
Traders said the physical market had responded to news that U.S coal miner Drummond, which owns Colombia's second-biggest mine, has had its export licence revoked following reports that a coal barge sank near Santa Marta port in mid-January.
"Drummond exports around 75,000 tonnes a day (27 million tonnes a year) through the terminal so the suspension of its export licence could have a major impact, if sustained," said one Colombia-based coal trader.
Santa Marta is a major coal export terminal is also one of the Latin American country's main tourist resorts.
Colombia's National Environmental Licensing Authority said the action was a "preventative measure" and would be lifted once Drummond updates local authorities on what happened and presents a contingency plan. [ID: nL1N0B6JSY]
Traders said the export licence is unlikely to be withheld for long as Colombia's government earns big royalties from coal mining.
The coal market was already strongly focused on Colombia because of a possible strike by miners at the country's Cerrejon mine, which exported 32.8-million tonnes in 2012.
Workers have until later on Thursday to decide whether to strike before a window on a walk-out closes. [ID: nL1N0B6FN9]
Supply concerns from Colombia also drove up prices for swaps, with the API2 contract for March delivery trading at $88.50, up $0.40.
Coal swaps for 2014 delivery traded at $99.60, down $0.15, as traders as the German power market continued to recover.
The main German power contract fell 0.15 euros over the day to trade at 41.45 euros/megawatt hour on Tuesday, as traders said an increase in solar power would comfortably meet additional demand prompted by colder weather. [ID: nL5N0B7FVK]
Analysts said that a forecast uptick in demand for coal in the U.S amid a likely increase in the price of gas is likely to mean a drawdown on stockpiles rather than increased production.
U.S. thermal coal miners, primed for a recovery in demand, will have to wait for up to a year while stockpiles are run down before profiting from the fuel's return to being the cheap alternative to natural gas in power generation, analysts said. [ID: nL4N0B43XM]
New-York based Doyle Trading Consultants said on Thursday it expects U.S exports of thermal coal to decline 10 million tonnes this year, meaning that forecast higher U.S. gas prices would only have a small impact on shipments to Europe.