Thomson Reuters Point Carbon has released this week’s Cross Commodity Report. The continued global oversupply of coal brings negative forecasts for both API 2 coal and carbon prices. German power prices have once again helped support prices.
API 2 coal prices rallied until mid-week despite the end of the strike at the ports and mines of Colombian coal producer, Drummond. The market saw increased buying from European utilities due to increased power demand and healthy dark spreads in Germany. Prices corrected later in the week.
Thompson Reuters Point Carbon suggest that the Cal-14 contract could continue down. The technical picture is mixed but the CCI recently posted a bearish crossover. The end to the strike in Colombia should start to weigh on prices – bringing them down – although the supply backlog will take time to clear.
The continued strong German power prices and rising clean dark spreads meant that carbon prices rallied in the first half of the week. A technical reversal mid-week triggered by an unsuccessful vote in the EU Parliament ENVI committee saw prices retrace the earlier gains.
Analysts expect the EUA Dec-13 contract to trade lower this week, mainly based on a bearish technical picture after the price reversal observed last week. How the power and carbon markets digest the impact of the German elections will also be a key driver this week.
Edited from various sources by Sam Dodson
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