By Joseph Clarke and Piers De Wilde

April 17, 2018 - The delivered-Europe thermal coal market saw lower prices at the start of the week as spot demand from utilities continued to dwindle.

Russian and US origin coal remained well-offered to the market but no spot deals were heard, while stockpiles at European terminals EMO Rotterdam, OBA Amsterdam, and OVET Vlissingen fell to 3.67 million mt, down 340,000 mt on-week.

"US is pricing in but [spot] demand from Europe is not strong," a US trader said.

Some sources noted there could be potential supply-side issues as bearish Asian markets would narrow the arbitrage to divert additional tons from the Atlantic Basin into Asia.

Platts CIF ARA 6,000 kcal/kg NAR price was assessed at $81.75/mt, down 60 cents on-day, while the spread between Platts NEAT thermal coal index and the CIF ARA price was $5.15/mt Monday, having been $9.80/mt the prior week.

Elsewhere, South African coal continued to push higher in price as the benchmark grade 6,000 kcal/kg NAR coal traded higher, while tight supply for lower-CV grades caused the discount level from the benchmark to narrow.

A sell-side source said 5,500 kcal/kg NAR coal remained tight and "continues to suffer from diminished export volumes," but noted grades such as 4,800 kcal/kg NAR were beginning to soften as they faced more competition from weakening Asian markets.

Platts FOB Richards Bay 5,500 kcal/kg NAR price rose to $80.10/mt, up 60 cents day on day and the highest price since February 28.

Cal-19 at Multi-Month High

Bullish German power markets boosted thermal coal's Cal-19 contract, which reached a two-month high. German power prices provided support to the back of the curve with the front of the curve lacking support from lower bids and offers in the spot market.

The Cal-19 contract opened down 30 cents at $81.50/mt before rising sharply to $82.50/mt at 09:00 BST, peaking at $83.05/mt towards the end of trading.

S&P Global Platts assessed the Cal-19 contract at $82.80/mt Monday, up $1 on day and the highest level since February 22.

A Switzerland-based trader said the higher euro/dollar exchange rate would have also added more upward price pressure to the Cal-19 contract.

EUA carbon futures also saw upward price movement, contributing to the rise in the Cal-19 as well.

FOB Newcastle futures struggled to gain any ground Monday amid bearish news from China regarding import restrictions, with a low level of liquidity throughout the day. 

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