* Drumond export shortfall to be 4.5 to 5.5 million tonnes
* But price impact to be limited as other producers step in
* European coal stocks will also mitigate Colombian
By Henning Gloystein
LONDON, Jan 14 Colombia's coal export
difficulties will reduce its supplies to Europe this year by
almost 10 percent but the shortfall will not have a big market
impact as other producers step in and high stock levels lessen
the impact, analysts said.
Colombia typically supplies around 50 million tonnes a year
of hard coal to Europe, making up almost 20 percent of European
The Colombian government passed a law last year requiring
coal producers to build direct ship-loading facilities in their
ports by Jan. 1, 2014. These enclosed conveyor belts, which pour
coal direct into vessels' holds, reduce the pollution associated
with the use of cranes and barges.
But U.S. mining company Drummond, which provides
around a third of Colombia's exports, had to halt loading at its
port as it has yet to finish building its system, which it
expects to have in place in March.
Following reports of the export ban, European physical coal
prices rose almost 8 percent as supplies tightened during
Europe's peak winter energy demand period.
Deutsche Bank said on Tuesday that a halt to Drummond
loadings from Colombia would probably remove 5.5 million tonnes
of supply in the first three months - which would equate to
roughly 10 percent of annual exports - assuming that direct
loading becomes available by the end of March.
Despite the reduction in Colombian exports, French Bank
Societe Generale said it did not expect Drummond's export ban to
have a long lasting impact on Europe's coal markets, where
around 70 percent of Colombia's coal goes to.
"We estimate that the maximum impact should be equal to 80
days. In terms of lost volumes, we estimate the impact to be
approximately equal to 4.5 million tonnes assuming there is no
resolution of issues before the end of March," Societe
Generale's Paolo Coghe said in a research note, also on Tuesday.
He added that he did not expect the price rally that
followed the ban to last for long.
Societe Generale said that other coal suppliers such as the
United States could step in to make up for lost Colombian
cargoes and that healthy European coal stocks of almost 6.5
million tonnes at the end of December would also mitigate the
"All in all, we believe the impact of Drummond's lost
volumes on the seaborne market will be limited both in time and
in magnitude," the bank said.