LONDON: European physical coal prices were broadly steady on Thursday as traders waited to see whether last-ditch talks between mining bosses and unions at Colombia's second-largest producer will avert a strike called for next week.
Prices for coal destined for Amsterdam-Rotterdam-Antwerp (DES ARA) and delivery in August last traded at $75.00 a tonne on Thursday, unchanged from Wednesday's late trading level, with 50,000 tonnes changing hands in the contract.
The September contract was up $0.20 from Wednesday's late trade of $76.50.
A strike at US coal miner Drummond's Colombian operations is unlikely to be prolonged if it goes ahead, traders and analysts said, with the company loath to lose more output after disruption earlier this year and with government royalties at stake.
Workers at Drummond's two mines and port in the world's fourth-biggest coal exporter voted on Wednesday to strike after failing to reach a deal on pay and working conditions despite almost two months of talks.
Port workers will also take part in the stoppage if it goes ahead, meaning even Drummond's stocks at the ports would be unable to be shipped, immediately cutting off nearly one third of Colombia's coal output which was 89 million tonnes last year.
But strike action is not yet inevitable. The Sintramienergetica union will meet with Drummond again around 1430 on Thursday, local time, (1930 GMT) in a final effort to reach a deal, without which the strike will proceed within days.
"We'd be surprised if a prolonged strike occurred ... Drummond certainly wants to prevent a strike and any further disruptions to output," Doyle Trading Consultants said in a market bulletin on Thursday.
"The government relies on coal royalty revenue, and they arguably need the money now more than ever," the bulletin said, referring to lost tax income after a month-long strike in February at rival miner Cerrejon, a now-lifted ban preventing Drummond loading coal in February, and a stoppage at the La Francia mine owned by Goldman Sachs.
South African coal for August delivery settled at $74.00/tonne, down $0.70 on Wednesday's settlement.
In the market for coal futures, API2 futures for 2014 delivery traded at $85.97 a tonne, down from $86.80 late Wednesday, weighed down by weaker German power prices and gains in the dollar against the euro.
Traders often sell coal futures when they sell power, while strength in the US currency makes dollar-denominated coal more expensive for European utilities.
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