European physical coal prices stay more than $8

European physical coal prices remained much more expensive than other benchmarks on Friday as cool weather and the Ukraine crisis supported the market there while low demand in India and China pulled down South African and Australian prices. The premium over South African and Australian prices remained around $8 per tonne on Friday.
Coal cargoes for delivery in September to Amsterdam, Rotterdam and Antwerp (ARA) saw a bid/offer spread of $77.15/$77.25 per tonne on Friday afternoon, compared with a settlement price of $69 a tonne in Australia and comparable bid/offer mid-points in South Africa, where price levels have fallen to five-year lows. "Chinese and Indian coal orders from South Africa, and Australia, have fallen sharply in recent weeks, leaving coal stocks full and order books empty," said one coal trader.
"At the same time, the cool temperatures and crisis in Ukraine has supported prices in Europe, explaining the high price difference," he added. Healthy hydro power output following a wet Chinese summer has eaten into coal demand while domestic coal mining output has reduced the need for imports, especially from Australia, pulling down prices there. In South Africa, exports to India have fallen in recent weeks as a supply squeeze that threatened coal-fired power plant output earlier in the summer eased somewhat.
Stockpiles at South Africa's Richards Bay coal export terminal are over 5 million tonnes versus 2 million in May, trading sources said. In Europe, by contrast, prices have been supported due to utility demand and the crisis in Ukraine. North-western Europe, which includes top buyers Germany and Britain, has been dominated by unusually cold weather since early August, boosting demand.
Although meteorologists say warmer conditions will move into the region by August 24, coal demand is not expected to fall by much as utilities begin to prepare for the end of summer by ordering new coal to fill up their stocks. Adding to pressure on Europe's coal markets is the crisis in Ukraine, where intense fighting in the east of the country has forced coal mines to cut production or close, imperilling the country's electricity market and potentially forcing the government to cut exports, limit consumption, or begin seaborne imports.