Physical Prices Down as Warm Weather Saps Demand
- ARA coal for August down 50 cents to $72.50/tonne
- BHP Billiton says might cut coal production in Australia
European physical coal prices continued to slide on Thursday as warm weather across Europe sapped demand for energy.
Cargoes for delivery in August to the European ports of Amsterdam, Rotterdam and Antwerp (ARA) slipped by 50 cents to $72.50/tonne on volume of 50,000 tonnes traded, according to the GLOBALcoal trading platform.
"It's been hotting up across Europe this week, impacting demand which was never really strong anyway," a coal trader said. "It's not quite hot enough yet to spur demand for cooling either," the trader added.
Coal prices have been under pressure for several months due to an global oversupply of coal and weak energy demand in Europe due to a mild winter and spring.
This is squeezing the margins of coal producers.
Major coal exporter BHP Billiton (BHPLF) said this week that it might cut production at one of its biggest metallurgical coal mines in Australia.
The firm said further cuts were likely as it continues to review all its coal operations to ensure they do not make losses, with thermal and coking coal prices having slumped to near five-year lows.
In Britain, the British government and investor Harworth Estates are continuing talks with UK Coal and other stakeholders over a loan to allow the managed closure of the company's mines, after another potential lender pulled out.
(Reporting by Nina Chestney, editing by David Evans)
