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THERMAL COAL-Prices stuck in the doldrums as oversupply weighs

Published 08/10/2015, 03:06 am
Updated 08/10/2015, 03:08 am
© Reuters.  THERMAL COAL-Prices stuck in the doldrums as oversupply weighs
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LONDON, Oct 7 (Reuters) - European thermal coal prices remained depressed, with all regional markets having fallen sharply since the start of the year, as miners have been slow to cut production in response to the global glut in supply.

European cargoes for nearby delivery into Amsterdam, Rotterdam or Antwerp (ARA) GCLARAPDSMc1 last closed at $50.65 a tonne, having dipped as low as $49 last week.

European API2 2015 coal futures TRAPI2Yc1 were down 0.3 cents or 0.6 percent at $49.50 a tonne, near their lowest since November 2003.

"There doesn't seem much appetite to buy it here," said a trader, adding there was a market consensus that prices had further downside yet.

Prompt prices for Australian coal cargoes from its Newcastle terminal GCLNWCPFBMc1 have fallen by around 15 percent since the end of the first quarter when annual offtake agreements with Japan are negotiated, closing at $53.95 per tonne on Tuesday.

Traders said demand was weak for lower quality Newcastle coal in particular.

"The higher ash coal is not going into China because of all the quality restrictions," said a trader.

Chinese coal imports have collapsed in 2015, as environmental concerns combined with a government drive to support domestic coal producers have hit shipments.

Earlier on Wednesday top thermal coal exporter Glencore's GLEN.L head of coal Peter Freyberg spoke at an event in Australia where he said the company's long term supply and demand outlook has never relied on ongoing Chinese import demand growth.

Freyberg said Glencore saw strong future demand from Korea, Taiwan, Vietnam, India, Japan and other countries.

Prompt cargoes from South Africa's Richards Bay terminal GCLRCBPFBMc2 last closed at $50.65 a tonne, down around 4 percent over the past month.

In another blow to coal lending, Citigroup (NYSE:C) C.N this week joined the retreat by investors and lenders in the sector, further tightening its policy on its credit exposure to coal miners. ID:nL8N12645C

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