Downward pressure on coal prices as Colombia strike ends

Thomson Reuters Point Carbon has released this week’s Cross Commodity Report with negative forecasts for both API 2 coal and carbon prices.

Coal

API 2 coal prices rose for the second week in a row, despite continuing weak market fundamentals, as German power prices rallied. However, news that the strike at Drummond’s Colombian coal operations has ended and production restarted will put downward pressure on coal prices in the coming week.

Developments in German power prices remain another key driver, while the outcome of the Federal Reserve Open Markets Committee (FOMC) meeting could also have an impact on the euro-dollar exchange rate, potentially influencing coal prices. Thomson Reuters Point Carbon forecast is negative for the week.

Carbon

Carbon prices suffered an early drop before rising sharply on the back of technical support and surging German power prices, ending up 1.5% week-on-week.

The upward rise is not to last, however, with Thomson Reuters Point Carbon forecasting a downward trend as technical selling and additional supply from Polish auctions enters the market. But the downside is likely to be limited, as high clean dark spreads are currently providing support to the market.

Edited from various sources by Jonathan Rowland

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