Euro Coal-Futures volumes drop to 14-month lows
* European demand drops on mild January weather outlook
* Rising Indian output pulls down South African cargoes
LONDON Dec 3 (Reuters) - European coal futures trading volumes dropped to a 14-month low on brokerage globalCOAL in November following record months in September and October.
Trading activity in physical and financial coal surged in September and October after a trading house took on a large physical coal position to support another position in the futures market, but activity dropped sharply once the majority of those positions were closed by early November.
"Following two all-time record highs for traded volumes in September and October, volumes of ICE coal futures dipped to 77 million tonnes in November," globalCOAL said in a monthly report on Tuesday.
The lower volumes were caused by a sharp drop in European coal trading, while Australian Newcastle and South African Richards Bay contracts remained near their monthly averages.
"Monthly volumes for the ICE Rotterdam contract were at a 14-month low, totalling 50.5 million tonnes," the brokerage said.
In the physical market, prices dipped on Tuesday as Indian coal production was set to improve, reducing the need for imports, and as European demand weakened.
Coal India said it would resume full production on Wednesday from a major coal field that closed last week due to a labour protest, cutting off a supply of about 200,000 tonnes a day to power producers and others.
Indian utilities mostly import from South Africa when domestic miners cannot meet their demand, so Coal India's rising output will result in lower Indian bidders in South Africa.
In Europe, demand for new coal imports has ebbed since the end of November as meteorologists expect a warmer-than-usual January and February following a relatively cold December outlook.
"A lot of European utilities bought supplies for December, which is expected to be rather cold," a coal trader said.
"But as January and February now look to be warmer than the seasonal norm, utilities are not buying coal, hoping they can eat down their stocks in early 2014 rather than buy new imports."
South African cargoes for January were valued around $83.50 a tonne on Tuesday afternoon, down 15 cents from their previous settlement, while January deliveries into Europe saw a bid/offer range of $79/84.75 a tonne compared with a settlement of $84.10 a tonne.
These price drops meant South African and European physical coal prices were below Australian shipments - valued slightly above $85 a tonne for January - for the first time since early November.
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