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Coal prices fall in Europe as summer cools demand

World Coal,

Thomson Reuters has released its regular Inside Dry Freight newsletter, detailing that European spot prices for coal have fallen despite the crisis in Ukraine, as weak summer demand has meant there is little need for new fuel orders.

Cargoes for delivery in July to the European ports of Amsterdam, Rotterdam and Antwerp (ARA) traded at US$ 72.75/t, down half a dollar since their last settlement, according to the GLOBALcoal trading platform. The August ARA contract slid by US$ 1.35 to US$ 73/t.

"It's mild across Europe so demand is low and our stocks are also quite well filled, so we're burning those off before ordering new cargoes," one coal trader said.

A blast on Tuesday rocked one of Ukraine's main pipelines supplying Europe with Russian gas, although authorities in Moscow and Ukraine said gas flows were not immediately affected.

The explosion, which Ukraine said might have been a "terrorist attack" came a day after Russian natural gas exporter, Gazprom, halted deliveries to Ukraine, marking the third such disruption over payments since 2006.

Gas prices rose in the hours after the cut-off, but they eased later on Monday and in most of Tuesday's trading Europe's gas demand is at its lowest in summer, while alternative gas supplies are healthy and the region well stocked following a mild winter and spring.

Futures also fell, with API2 2015 coal contracts dipping below US$ 80/t.

"If the Ukraine crisis persists, I imagine API will rise back above US$ 80. If some sort of agreement at least over gas is found soon, it will surely drop well below US$ 80/t," another coal trader said.

Although prices of physical coal from South Africa's Richards Bay export terminal came under pressure from the lull in summer demand from Europe, its cargoes received some support from India, which saw a huge demand for coal to cope with scorching summer temperatures. 

Edited by Sam Dodson

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