Thermal coal futures prices held above a more than seven-year low on Friday as a temporary mines closure by the world's largest exporter of thermal coal Glencore Plc helped support prices. European API2 2015 coal futures edged up 40 cents to $71.35 a tonne at 1758 GMT. Prices had dipped to $69.60 last week, their weakest since 2007.
Glencore plans to shut its Australian mines for three weeks to help erode a crippling global supply glut that has pushed prices to multi-year lows. The company has estimated that up to a third of Australia's coal sector currently runs at a loss. The coal market has been plagued by oversupply for years, with prices steadily declining since 2011 as production has increased.
Traders and analysts said the 5 million tonne reduction in output would have little impact on the billion tonne a year global market. Georgi Slavov, head of Marex Spectron's basic resources research, said that the move was not entirely unexpected although it was perhaps earlier than people had anticipated.
"Glencore and many other miners reduce production in December because of the holiday season and maintenance," Slavov said. "The (futures) price reacted initially positively and then the momentum faded away." Investec Securities said in a note that Glencore "appears to have taken the decision to help balance the market, hoping perhaps that others may follow suit".
In the physical markets, cargoes for delivery in December from Australia's Newcastle terminal edged down 65 cents to $62.75 a tonne on the GLOBALcoal platform. China, the world's top producer and consumer of coal, is considering a proposal to cut coal export taxes to 3 percent from the current 10 percent as part of broader efforts to help local miners, trade sources said. Analysts said such a cut would have limited impact on Asian seaborne supplies in the near term as Chinese miners have high production costs and the exports would still be uncompetitive compared to the top two coal shippers, Australia and Indonesia.
Comments
Comments are closed.