Coal prices rise on strong German power prices

Thomson Reuters Point Carbon has released this week’s Cross Commodity Report with coal and carbon prices rising on the back of strong German power prices.

Coal

Contrary to last week’s forecast, coal prices rose last week following strong German power prices, although a resolution of the mine workers’ strike in Colombia exerted some downward pressure on prices at the end of the week.

These trends will continue, as easing supply concerns from Drummond’s Colombian mines soften prices. However, German power prices will likely remain the main price driver for coal though dark spread trading.

Carbon

EUA prices soared 16.6% week-on-week last week, mainly on the back of rising German Cal-14 power prices. The gains were despite bearish pressure from increased auction volumes and news on the start of Polish auctions on 16 September. The Dec-13 rose to above €5/t on Thursday and soared to the highest level since January by the end of the week.

This week, however, Thomson Reuters Point Carbon expects a downward correction for EUA Dec-13 contract. Additional bearish pressure will come from higher auction volumes this week and upcoming Polish auctions next week. That said, strength in German power prices should provide some support, limiting the imminent downside.

Edited from various sources by Jonathan Rowland

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