* Coal futures drop to lowest since beginning of financial
* Drummond suspension in Colombia lifted
* Mozambique's Sena railway resumes reopens
* Coal overcapacity clashes with weak demand
By Henning Gloystein
LONDON, March 4 European coal futures prices
dropped to their lowest since the start of the financial crisis
in 2008 as several force majeure cases in exporting countries
were lifted over the weekend.
API2 2014 coal futures contracts were trading around $96.60
a tonne at 0900 GMT on Monday, over 30 percent below their most
recent peak around $138 a tonne reached in spring 2011, when the
Arab spring, Australian floods, and the nuclear disaster at
Japan's Fukushima reactors caused a spike in energy prices.
It is also the lowest level since the peak of the financial
crisis in 2009.
Traders said that the price drops were a result of improving
supplies from exporters Colombia and Mozambique.
"With Colombia and Mozambique returning closer to usual
capacity, an already oversupplied market will receive even more
coal, and that is causing the price depression," one coal trader
with a utility said.
Colombia's coal troubled coal sector received respite last
Friday after a regulator lifted suspensions on the country's No.
2 exporter, Drummond Ltd, and on the main railway,
although its biggest miner, El Cerrejon, continues to be
affected by a strike.
Across the Atlantic in Africa, Mozambique reopened its Sena
railway line on Monday, the only available rail coal export
route for mining giants Vale and Rio Tinto
, after a two-week closure due to floods, state logistics
group CFM said.
The line, which connects the northern Tete province with the
coast, was shut on Feb. 12 after heavy rains and a derailment,
forcing several cases of force majeure on a number of coal
The healthy supplies are clashing with low demand.
In North America, the ongoing shale gas boom has led to a
collapse in domestic gas prices, reducing North American coal
demand, forcing its miners to sell abroad, mostly to Europe,
where coal demand is still healthy.
In Japan, power generation fell 7.0 percent in February from
a year earlier, marking a second straight year-on-year decline,
a Reuters calculation based on industry data showed on Monday.
In China, analysts say a change in environmental regulation
could lead to further dents in coal demand, as the world's top
coal burner struggles to cope with its rising pollution, to
which coal-fired power stations contribute.
"Reducing the extreme levels of air pollution in China has
moved to the top of the political agenda for the new government,
(and) the potential revisions to coal demand as a result of a
higher resource tax and levies on emissions would likely reduce
coal import demand markedly," Deutsche Bank said in a research