LONDON: Prompt physical coal prices fell to a new one-month low on Monday as traders pointed to a supply glut and tepid demand from European utilities.
South African coal for February delivery traded at $84.75 per tonne based on trades of 100,000 tonnes, according to brokers, down $1.35 from Friday's close and the lowest trade since mid-December.
European coal into Amsterdam-Rotterdam-Antwerp (DES ARA) for delivery in February was bid at $83.00 and offered at $84.25, down from Friday's close of $85.90.
"A lot of producers are holding material back from the market in the hope that demand will pick up soon, but those that are selling are doing deals at lower prices, suggesting there is a glut of physical coal," said one trader.
Lower prices for physical coal dragged down coal swaps as the API2 contract for 2014 delivery was at $101.55, down $1.05 or 1 percent on Friday's close.
German power prices fell to a new three-year low, with the baseload contract for 2014 delivery plunging to 43.75 euros/megawatt-hour, its weakest trade since December 2009, as traders anticipated milder weather next week and increased generation from solar panels.
Imports of steam coal into Germany fell 3.5 percent in 2012, according to data on Monday from coal importers' lobby VDKI.
The fall came despite the increased attractiveness of burning coal in power stations in 2012 compared with the year before as gas prices remained high and prices for emissions permits fell sharply.
Germany's lignite burn increased roughly 5.5 percent last year, VDKI data showed, which traders said was largely attributable to a 2,200 MW expansion of RWE's Neurath power plant, which came online last year.
VDKI did not provide a forecast for coal imports in 2013, although traders were trying to estimate to what extent US gas prices would impact the volume of US coal exported to northwestern Europe and whether cheaper freight rates would keep coal prices close to or below last year's levels.
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