Futures Edge Higher on Stronger Oil Prices
- API2 2015 coal futures traded at $72.70/t
- South African coal for December trades at $65.60/t
European thermal coal futures edged higher on Wednesday, buoyed by stronger oil prices.
API2 2015 coal futures traded at $72.70 a tonne on Wednesday afternoon, up 10 cents on Tuesday's close.
Traders said the rise came on the back of higher Brent crude prices, which climbed over $87 per barrel on Wednesday as oil traders anticipated that the Federal Reserve would keep U.S. interest rates low, putting pressure on the dollar.
Weaker currencies in coal producing countries typically make exports more attractive at a time when the market is bearish because of excess supply. Stronger oil prices also make coal use more attractive, traders said.
The API2 2015 contract has slowly rebounded since hitting $71 per tonne on Oct.20, its lowest level since March 2009, rising along with oil prices.
Trading activity in global physical coal markets was thin on Wednesday afternoon.
South African coal cargoes for delivery in December from the Richards Bay terminal traded at $65.60 per tonne, down 65 cents, with 50,000 tonnes traded.
The contract is hovering around 5-year lows due to rising output from fellow exporters including Australia, Indonesia, Colombia and the United States, and sluggish demand in industrialised and emerging markets.
The private railway at Colombia's largest coal miner Cerrejon has reopened after teachers protesting over pay lifted their blockade of the railway line, the company said on Wednesday.
Cerrejon said the almost two-day stoppage halted its trains but that exports were unaffected because of stocks at the port, and traders said coal prices had not been affected as the blockade had not led to a supply disruption.
In Europe's physical coal market cargoes for delivery in December to Amsterdam, Rotterdam and Antwerp (ARA) were bid at $73.50 a tonne, but had not traded by 1356 GMT. The contract settled at $74.70 a tonne on Tuesday.
(Reporting by Susanna Twidale; editing by Jon Boyle)
