LONDON Feb 8 Producers of coal have hiked
prices of cargoes delivered into northwestern Europe in response
to a likely fall in supply from Colombia, where workers at the
country's largest producer began a strike on Thursday.
European coal into Amsterdam/Rotterdam/Antwerp (DES ARA) for
delivery in April was offered at $89.50 for March cargoes,
compared with a previous settlement of $86.65 a tonne.
Producers were asking $92 a tonne for coal delivered in
April, $4.10 higher than Thursday's close, sending the physical
market to levels last seen in late December as traders priced in
potential disruption at three Colombian mines responsible for 85
percent of the country's exports.
"The issues at Colombian mines could have a big impact on
the availability of coal in Europe and we have seen European
power prices respond strongly," said one trader.
Baseload German power rose to 42.30 euros/megawatt hour, up
almost a euro from Thursday's close of 41.55 euros, the
contract's highest trade for two weeks.
Colombia is the world's fourth-largest exporter and produced
88 million tonnes in 2012, according to government figures. The
strike at Cerrejon impacts operations responsible for 36
percent of the country's output.
This means European utilities may have to buy more coal from
the United States, South Africa and Russia.
Prices for South African coal for April delivery rose $1 to
$86.00, with 50,000 traded according to brokers.
Coal had already posted strong gains on Thursday after U.S
coal miner Drummond, which owns Colombia's second-biggest mine,
had its export licence revoked on Wednesday following reports
that it dumped coal into the sea mid-January in an emergency
involving a barge at Santa Marta port.
Drummond produces around 80,000 tonnes a day or almost 30
million tonnes of coal a year in Colombia.
A third producer - Colombian Natural Resource's La Francia
thermal mine - has remained shut since late January due to a pay
dispute with the operator, according to union officials.
La Francia produces around 10,000-20,000 tonnes per day.
Coal swaps for 2014 delivery hit an intraday
high of $101.10, up from a close on Thursday of $99.60, although
prices slipped to $100.75, up over 1 percent on the day.