LONDON, Feb 8 (Reuters) - 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.