The European-delivered thermal coal market traded at its highest level in over two months Wednesday afternoon as sources said that the market is finally reacting to tightening supplies following the ongoing disruption in Colombian exports.
A 50,000 mt generic origin March DES Rotterdam shipment traded at $90.50/mt through London Commodity Brokers, $1.50 higher than the Platts 90-day CIF ARA price and the highest trade in the DES ARA brokered market since December 11.
Market sources said that the extended supply problems in Colombia are finally starting to give the European thermal coal prices a bullish push, as both the industrial action in Colombia's largest coal producer Cerrejon and a temporary ban on exports from second biggest exporter Drummond have no immediate end.
"The Drummond ban is dragging on and is increasingly being mired by problems, as the solution is not as straight forward was once thought," a north European utility source said, adding that the problem is turning "more complicated and nebulous."
Drummond coal exports were temporarily banned on February 6 by Colombia's environmental license authority ANLA after it was reported that the miner dumped coal into the sea while rescuing a sinking coal barge.
The utility source also said that the third-largest exporter, Prodeco, a unit of Swiss commodities trader Glencore, is still suffering from loading delays caused by strong winds in its Caribbean coal export terminal, which is adding to the existing problems in Colombian supplies.
However, Platts could not confirm that loading delays are under way.
Despite the shortfall in Colombian thermal coal into Europe, stocks in Amsterdam-Rotterdam-Antwerp remain healthy, with market participants saying that they remained well supplied with coal from South Africa and Russia.
The surplus availability of thermal coal in the Atlantic basin initially put pressure on European spot prices after Cerrejon workers declared strike on February 7, with Platts 90-day CIF ARA price shedding over $2 in the week to February 15.
However, as the talks between Cerrejon and its mine workers union Sintracarbon broke down over the weekend, prices have gained almost $2 since Friday to a week high of $89/mt Tuesday.
