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Newcastle thermal coal prices increased as demand is expected to surge in Europe where temperatures are forecast to start dropping dramatically in the next two weeks.
On November 25, the December contract on the ICE closed at $360.8/t, up 1.16% from a day earlier. This also strengthened 7.06% from a week earlier, extending the positive trend for seven days in a row.
Coal orders are increasing as Europe faces colder temperatures in the next two weeks in most parts. The temperature in Berlin is predicted to reach -3.5 degrees Celsius on December 3. Temperatures in major European cities such as Amsterdam, Helsinki and Stockholm will also be much colder than normal.
Gas storage in Europe is now on average around 95%, but the supply is expected to be depleted quickly in next 10 days.
Thankful to have an autumn warmer than previous years, Europe avoid an energy crisis with enough time to build gas and coal storage. The growth of energy prices stayed mild in the recent two months relative to August-September, but December may witness another price spike if the winter is cold as expected.
Coal stocks at European terminals increased recently, but this may help little to stabilize the prices. As of November 23, coal stockpiles at ARA ports totaled 5.89 million tonnes, the highest since the week starting October 17.
Coal shipments from major Europe's suppliers have been curbed. Colombia's second largest mine Cerrejon just resumed rail shipments to Puerto Bolivar terminal after a blockage by former workers demanding their jobs back, while South Africa just experienced weeks of rail suspension to Richards Bay after a derailment. Australia, also, was recovering its shipment following the decision of a tugboat company to withdraw the lockout.
(Writing by Alex Guo Editing by Tammy Yang)
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