LONDON Aug 15 (Reuters) – Prompt thermal coal prices
dropped by over $2 a tonne on Wednesday in expectation that
Colombian coal exports would return to normal now that a rail
strike which triggered force majeures clauses has been declared
illegal.
European utilities and traders said demand remained subdued
in Europe and much of Asia, and until buying picks up in
September, prices are likely to come under renewed downward
pressure, they said.
Prices fell to $93.50-$94 per tonne.
“I think next year, maybe even later this year, we’ll see a
slightly more balanced market, less oversupply so we should see
prices back at $100,” one European utility source said.
Oil extended Tuesday’s gains and was heading for a
three-month closing high, supported by hopes that policymakers
in Europe and elsewhere will take further measures to stimulate
economic growth. But European power prices weakened.
Coal, which often but not always tracks oil price movements,
has been driven more by sentiment than fundamentals or shifts
elsewhere in the energy markets during the past month, traders
and utilities said.
The Colombian rail and mine workers’ 27-day strike had more
impact on sentiment, encouraging a cautious bullishness, than on
physical supply, they said.
“Prices rose to over $96 on sentiment only when the strikes
caused force majeures – there is still too much coal and limited
demand – so I was not surprised to see it fall today,” a second
utility source said.
Force majeure is a clause provided for in contracts which
can release either counterparty from their commitments due to
forces beyond their control.
Continued…
