LONDON: European coal swaps prices edged lower on Monday following five days of successive gains last week, as weaker oil prices and an almost 3-year low in year-ahead German power prices prompted sourer sentiment among traders.
In the futures market for coal, the API2 2013 contract was traded at $96.80 a tonne, down 60 cents from Friday's close as traders reacted to losses in other energy markets.
"The swaps market was moved mainly by weaker oil and power prices," said one trader.
Oil dipped below the $111 level it had held earlier in the day as concerns about the euro zone's economic health trumped worries arising from tensions in the Middle East.
German baseload power prices for 2013 delivery fell to 46.20 euros/MWh, the lowest price in the front-year contract since early 2010.
Coal for delivery in February at Amsterdam/Rotterdam/Antwerp (DES ARA) was bid at $92.85 and offered at $94 a tonne at 1645 GMT, compared with a previous close of $92.20, according to figures from brokers.
South African cargoes for delivery in February traded at $89.75, down from Friday's close of $90.05.
The euro traded at $1.2970 on Monday, down only slightly from Friday's close of $1.2882, when the European currency unit hit a three-week high and enabled increased buying power among European utilities.
Barclays said in a commodities report on Monday that coal prices could come under pressure from increased shipments from producer nations such as Columbia and Indonesia in 2013.
Meanwhile, domestic coal prices in China could weaken as some smaller mines ramp up production following closures ahead of last month's Communist Party Congress, making imports seem relatively more expensive, the bank added.
And India appears to prefer cheaper but lower grade Indonesian coal, the report said, limiting demand for shipments of more expensive South Africa grades.
"Although any potential downside is unlikely to be marked, we see some slight correction room for prices to align more closely with the realities of the supply and demand situation," the report said.
But Barclays said this year's theme of plentiful in the market is likely to continue in 2013, even if US volumes begin to decrease on the back of production declines and higher gas prices.
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