* June ARA bid at $91.50/T
* Coal oversupply pressures prompt
LONDON, April 25 (Reuters) – European prompt physical coal
prices dropped by around $1.50 on Wednesday in line with weaker
power demand, and with mounting pressure on prompt values due to
coal oversupply.
“Both swaps and physical came off fairly strongly today,
with a lot of pressure on the prompt months – there’s just too
much coal,” one utility source said.
A June DES ARA cargo was bid at $91.50 a tonne, down from
over $93.00 earlier in the week and although it did not trade at
this level, fundamental bearish pressure should push prices down
another notch within the next couple of weeks.
“Probably $91.50 won’t seem so low fairly soon,” one trader
said.
Despite strong coal burn in the UK, Germany, Italy and
Spain, there is still a substantial amount of coal in ARA
inventories – up to 9 million tonnes, according to some industry
sources.
Most European spot electricity prices fell on Wednesday on
warmer weather and more German wind power supply, while the May
1 holiday in major power consuming countries weighed on demand.
Most European utilities will need to buy a limited amount of
spot tonnage, but the Mediterranean plants are likely to need
more significant spot volumes.
Continued…
