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THERMAL COAL-Prices fall amid worries over Chinese demand

Published 29/07/2015, 07:36 pm
© Reuters.  THERMAL COAL-Prices fall amid worries over Chinese demand
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By Jacob Gronholt-Pedersen

SINGAPORE, July 29 (Reuters) - Physical coal prices in Australia and Europe continued to fall over the past week, pushed lower by concerns over demand in China after a massive rout in the country's stock market.

Cargoes for delivery into Europe's main ports at Amsterdam, Rotterdam and Antwerp in August last closed at $57.40 a tonne, down nearly $1 on the week and more than 5 percent so far this month.

Coal for delivery in August from Australia's Newcastle terminal edged lower to $60.25 a tonne over the past week.

A stunning 8.5 percent fall in Shanghai shares on Monday rattled global equity markets and stoked concerns over slowing demand for commodities in the world's second biggest economy.

Thomson Reuters CRB commodities index .TRJCRB hit its lowest levels in six years this week.

"There is no doubt that the broad commodity market sell-off is causing head winds for any attempt at (coal) price recovery," said Georgi Slavov, head of research at Marex Spectron.

Despite a rise 0.7 percent rise in China's total energy consumption in the first half of the year, coal use for power generation fell in the period as more oil, natural gas and renewable power were consumed, National Energy Administration (NEA) said.

"Coal consumption in China has been weak and there is little evidence to suggest that the situation will change soon," Slavov said.

China's own coal output fell 5.8 percent to 1.79 billion tonnes in the first six months of the year, while fixed asset investment in the sector plunged 12.8 percent, the NEA said.

China's energy consumption has tripled in just two decades but annual growth has now slowed considerably as a result of an economic downturn.

The impact has been felt disproportionately in coal, which accounts for around two-thirds of total energy use but is now the primary target of the government's "war on pollution".

Germany's coal imports are likely to fall to 53 million tonnes in 2015 from a record high last year of 56.2 million, lobby group VDKi said.

India could import 3 percent less coal in the year to next April despite a jump in demand, the coal minister said, as local output rises at a record pace.

On the supply side, efforts by Brazilian miner Vale's VALE5.SA to start coal shipments from the Mozambique port of Nacala in the third quarter were dealt a blow after a coal stacker collapsed, sources told Reuters.

European coal futures closed down 25 cents at $56.40 a tonne on Tuesday. The contract has fallen $4.25 in July.

(Editing by Tom Hogue)

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