European thermal coal markets' subdued mood continued amid the opening of a new week as little change to common bearish fundamentals enhanced the negative sentiment among market participants.
Stockpiles remained high at Dutch terminals, with OVET Vlissingen measured at 400,000 mt, down a mere 15,000 mt -- or 3.6% on the week, and at OBA Amsterdam 2.12 million mt, down 130,000 mt, or 5.8% on week.
The consistently elevated stockpiles have remained at these levels because of a lack of demand from the European market, contributing to the lagging coal burn, as well as the tumbling wider energy mix, most notably natural gas.
"Gas supplies to Europe is the biggest market mover," a Switzerland-based trader said.
Many market participants expressed the same concern for the influx of supply.
"There's a global oversupply [of gas], and there's warm temperatures," a European-based trader said.
LONG, COLD WINTER UNLIKELY
Sources were hoping for a long and cold winter, but this likely will not be the case as monthly weather forecasts show temperatures in Germany, Europe's largest power market and coal consumer, were forecast to trend 2-4degreesC above normal through the end of the year, limiting electricity demand, according to Platts Analytics.
Looking forward, sources have said the current issues will "definitely not" be coming to an end anytime soon.
Thermal coal prices marginally dropped off as S&P Global Platts assessed the CIF ARA 6,000 kcal/kg NAR physical price at $52.65/mt, down 75 cents from Friday. A bid and offer were heard for February delivery at $52.50/mt and $55/mt.
A trade for January delivery was heard at $52.65mt, with legs of $52.50/mt and $52.75/mt.
CIF ARA futures started the week by opening sideways Monday and endured minimal movements for the majority of the day, trading within an intraday range of 25 cents via the ICE.
The futures price remained almost flat as Platts assessed the CIF ARA year-ahead Cal-20 contract at $59.10/mt, up 5 cents day on day, after trading within an intraday range of $59-$59.30/mt.
SOUTH AFRICA WEATHER TO CUT PRODUCTION
In the South African market, sources noted that continued treacherous weather, including flash floods in Mpumalanga and Limpopo provinces, have had a serious effect on three coal-fired power plants.
According to Platts Analytics, as a result of the current conditions, sporadic coal production halts were likely at underground coal mines, which rely heavily on electrical equipment.
Platts will continue to monitor the situation closely, as prolonged load shedding could more severely cut into production.
Discounts from the futures market to the physical export prices remained increased across the board from Friday, with the discount for 5,500 kcal/kg NAR material heard at $11.75/mt.
Platts FOB Richards Bay 5,500 kcal/kg NAR price was assessed at $57.05/mt, down 70 cents day on day.
