European thermal coal futures fall

European thermal coal futures fell on Monday to $71 a tonne, their lowest since March 2009, as weak oil prices and oversupply in the coal market weighed on prices. API2 2015 coal futures traded at $71.25 a tonne on Monday afternoon, down 40 cents on Friday's close. They touched $71 per tonne earlier in the day, a level last seen at the height of the financial crisis in 2009 and close to levels in 2007.
Traders said the fall in coal prices came on the back of the weakening crude oil, which fell below $85 per barrel on Monday. Oil prices are down more than 25 percent since June, and energy economists have slashed their forecasts of world oil demand growth for next year as the global economic outlook weakens. There was little trading activity in the European physical coal market on Monday.
Coal cargoes for delivery in November to Amsterdam, Rotterdam and Antwerp (ARA) were valued at $71.50 a tonne, down 50 cents from Friday's settlement. Cargos for December delivery were valued around $71.80, unchanged from Friday, but neither contract had traded by 1500 GMT. Forecasts of a mild winter in Europe have led to scant demand for coal from European utilities, which traders say are already well stocked with the fuel.
Analysts at US bank Morgan Stanley said they did not expect any respite from low prices in the short term due to continued oversupply in the market. "We think (thermal coal) prices are not yet low enough to prompt an adequate supply response," they said in a research note. Global coal prices have halved over the past three years as a result of rising output from exporters including Australia, Indonesia, South Africa, Colombia and the United States and sluggish demand from both industrialised and emerging markets.
In Asia, China's coal production fell 7 percent from a year ago to 292 million tonnes in September, according to an industry website that cited data from the National Bureau of Statistics. Australian cargoes for delivery from its Newcastle terminal in November were trading at $62.50 a tonne on Monday afternoon, down 70 cents since their last close and near five-year lows. Cargoes for delivery in January traded at $63 a tonne, down 30 cents.