Futures Rise, Physical Quiet on Mild Weather

• API2 2015 contract up 2 pct at $72.90/tonne
• Trade in physical coal markets quiet

European thermal coal futures rose on Wednesday afternoon, tracking oil prices, but trade was quiet in physical markets.

The API2 2015 contract was almost 2 percent higher at $72.90 a tonne at 1410 GMT.

Oil edged up above $86 a barrel after an industry report showed a smaller-than-expected rise in U.S. crude inventories, extending a tentative recovery from a four-year low.

However, trading activity in the European physical coal market was quiet. Contracts for delivery in November and December to Amsterdam, Rotterdam and Antwerp (ARA) have not traded since October 15.

The January contract has not traded since October 16.

Traders say there was little demand for physical coal from utilities in Europe as current weather forecasts predict another mild winter, dampening expectations for power demand.

South African and Australian cargoes had also not traded.

Australian coal will be exempt from new import tariffs imposed by China when the two countries sign a free trade pact, Treasurer Joe Hockey said after a meeting in China on Wednesday, although the timing of a deal has yet to be finalised.

Australia and China are trying to seal a free trade agreement before the end of this year after nearly 10 years of negotiations, in a bid to boost two-way trade already worth more than A$150 billion ($132 billion).

Beijing stunned Australia this month by imposing a 3 percent tariff on coal used in steel mills and 6 percent tariff on coal used in power stations, hitting A$9 billion ($7.9 billion) worth of exports from Australian miners already reeling from a slump in prices

India could allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto (RTNTF) to access the world's fifth-largest coal reserves, a source familiar with the matter told Reuters on Wednesday.

Currently, only Indian power, steel and cement companies can mine coal for their own consumption. Commercial mining is dominated by state-owned Coal India Ltd.

Thailand's top coal miner Banpu PCL said it aimed for coal sales of 50 million tonnes in 2015, higher than the 48.8 million forecast for 2014, mainly due to rising output from its mines in China.

Next year's average coal price should be close to this year's $70 a tonne, chief executive Chanin Vongkusolkit told reporters.

(Reporting by Nina Chestney, editing by William Hardy)