(Repeats Friday story without changes to reach additional
* Colombian producers losing 150,000 tonnes output a day
* Market's reaction muted so far but big drawdowns on stocks
By John McGarrity and Jack Kimball
LONDON/BOGOTA, Feb 22 The failure of European
coal prices to rise sharply at a time when Colombia is losing
around 150,000 tonnes a day of output, due to strikes and an
export ban, shows just how oversupplied the market has become.
Strikes at two Colombian producers since earlier this month
and an export ban at a third mine could mean the world's fourth
largest exporter loses almost 3 million tonnes of production for
February unless there is a resolution soon, calculations by
Reuters and analysts suggest.
That figure - equivalent to the amount of thermal coal
Germany imports in an average month - would be expected to lead
to a jump in prices during times of economic growth.
But the apparent global abundance of coal and weak demand in
key markets may mean buyers have been cushioned from big price
rises despite multiple disruptions to shipments, analysts said.
Prompt deliveries of coal into northern European ports are
trading just below $90 a tonne, just a few dollars above their
levels before the main Colombian strike began on Feb.7, while
API2 coal swaps for 2014 delivery on Friday settled
near $99/tonne, $3 above levels at the start of this year.
Other problems hitting coal exporters have failed to drive
up coal swaps.
"We have already seen torrential monsoon rains in Indonesia,
a strike in New South Wales, cyclone-related disruptions in
Queensland and no big consequence (for prices)," said Carlos
Fernandez Alvarez, a coal analyst with the International Energy
"So probably that feeling of oversupply is more than a
feeling," he added.
Earlier this week traders at some utilities that buy from
Colombia said the market would start to get nervous if supply
disruptions continued into next month.
Colombia's thermal coal exports of 77.4 million tonnes last
year accounted for around 10 percent of total global seaborne
"That prices have not moved at all, apart from a $2.50 up
and down move on the back of strike news at the Cerrejon mine
(Colombia's largest), reveals that the market was oversupplied
by a great amount," said an analyst with a trading house who
Based on national import figures, the Latin American country
accounts for around 30 percent of imports in Britain, Germany,
Turkey and Spain, which between them took delivery of around 32
million tonnes of Colombian coal in 2012, the analyst said.
Israel, Chile and the United States account for a further 16
million tonnes of demand for Colombia's coal, meaning customers
will need to source alternative supplies, defer shipments or
draw down stocks if production problems persist into next month.
Demand for coal in Europe tends to ease in the second
quarter as the northern hemisphere moves into spring, although
from the start of March stockpiles are likely show a major drop
because of the cancelled shipments from Colombia, analysts said.
Around 2.5 million tonnes of coal is stored at Rotterdam's
coal terminal, up 500,000 from the end of last year, and the
figures will start to fall at the time when Colombian shipments
would have completed their voyages to European ports.
Between them utilities in northern Europe and the
Mediterranean are estimated to import around one capesized
vessel (150,000 tonnes) of Colombian coal a day on average.
The strike at Colombia's largest producer Cerrejon, a joint
venture between Anglo American BHP Billton and
Xstrata, is now in its third week, costing the company
around 100,000 tonnes in lost production a day.
This has prompted default on some of the mine's shipments
and the cancellation of orders by power generators.
On Friday, the main union at the mine said it would re-enter
preliminary talks with management but will only deal with the
logistics of re-starting wage negotiations.
Meanwhile an export ban imposed by the government for
environmental reasons on Drummond, Colombia's second biggest
producer, prompted the company to slash daily production of
around 80,000 by three-quarters from Thursday after stocks
reached maximum capacity.
A third producer, La Francia, is losing 15,000-20,000 tonnes
a day of production because of a strike.
Taken together, the stoppages would cost Colombia 4.5
million tonnes a month in lost production, according to
(Editing by Anthony Barker)