Drummond situation impacts coal prices

Thomson Reuters Point Carbon has released its latest cross-commodity scorecard, with coal prices affected by Drummond’s situation in Colombia.

Coal

API2 prices were rangebound at the beginning of last week after Drummond continued to load coal at its site in Colombia, despite an order to stop operations. However prices rallied midweek, breaking above the US$ 82/t level after the loading process was stopped. Drummond declared force majeure on its exports but is looking to use nearby ports. Prices dropped on Friday on profit taking.

Prices this week will continue to be affected by Drummond’s situation in Colombia. The company has stated that the direct loading technology will not be ready for use before late March 2014. However, demand throughout Europe remains week, and utilities are unable to obtain coal from other sources. However, profit taking still looks possible, and Thomson Reuters expects prices to continue to rise this week.

Carbon

Carbon prices fell through last week as the market increasingly priced in the transfer of free allocation volumes to industrial operators. The Climate Change Committee approved backloading last week, and the Commission requested a shorter scrutiny period from EU co-legislators. However, the length of the scrutiny period remains unknown.

Despite pressure from free allocation and a recent drop in the clean dark spread, Thomson Reuters Point Carbon predicts that the upcoming release of Commission documents on the 2030 policy framework and structural reform of the EU Emission Trading Scheme could provide a price floor this week. If leaked documents reach the market, in particular any legal proposals for structural reform, they may send a bullish signal for prices.

Adapted from press release by Katie Woodward

Read the article online at: https://www.worldcoal.com/coal/13012014/drummond_situation_affects_prices_398/