[miningmx.com] — Prices of prompt coal cargoes fell by around $1.00 a tonne on Monday as fears of a severe supply crunch eased, traders and utilities said.
Although floods in Australia, which is a major coal supplier, have spread south to Victoria, floodwaters have begun to recede in Queensland and Brisbane and suppliers hope to resume exports soon.
Temperatures have risen across much of Europe and some of the continent’s biggest power generators are burning less coal than they had anticipated, utility sources said.
“We’ve needed over 100,000 tonnes less in January and with the margin on burning coal looking so awful, you can expect this to continue,” one utility source said.
Utilities in the UK, France, Spain and Germany have enough coal in stockpiles at plants and in Amsterdam-Rotterdam-Antwerp to cope with any further export hiccups, sources said.
“The market’s still taking a step back, taking a breather and prices of over $140 a tonne were an overreaction but I don’t see prices falling below $110-$120 for the rest of this year,” one major trader said.
Some analysts remain bullish, however. In a research note on Monday, analysts Wood Mackenzie stuck to their price forecasts for Australian Newcastle coal.
The Wood Mackenzie note said that Newcastle prices could approach or exceed the $197 a tonne record seen in 2008 because supply globally remains tight.
“The scale of current flooding in Queensland is worse than the heavy rainfall of 2008. However, because the situation is still ongoing with more rain possible, the magnitude of the full supply impact is uncertain,” Wood Mackenzie said.
