European thermal coal derivatives volume rises 4% MOM in Feb on favorable economics

The volume of thermal coal derivatives traded and cleared by brokers affiliated with the London Energy Brokers Association rebounded in February from the fall in the previous month, driven by favorable market economics in Europe and a slight uptick in demand, seen according to LEBA data by S&P Global Commodity Insights March. 21.

The total derivatives volume traded and cleared in February was 24.8 million mt, up 4% on the month and largely in range year over year, according to the March 21 data from LEBA, which represents FCA-regulated wholesale market brokers in the over-the-counter and exchange-traded European energy markets.

The volume of European CIF ARA derivatives traded and cleared in February was down 3% on the month and 32% on year to 19.5 million mt, making up over 75% of the total derivatives volume traded and cleared during the month, the LEBA data showed.

Market participants said the rise in renewables and warmer weather conditions reduced the feasibility of coal burning in Europe, leading to a fall in demand.

In February, Platts, part of S&P Global Commodity Insights, assessed CIF ARA 6,000 kcal/kg NAR coal monthly average drastically down from $108.62/mt in the previous month to $97.16/mt, reflecting the fall in coal demand for European utilities.

Also, the FOB Newcastle derivatives volume was down 26% on the month to 4.3 million mt but up 6% on the year, according to LEBA.

While CIF ARA and FOB Newcastle derivatives fell in February, FOB Richards Bay derivatives rose sharply on the month, as South African thermal coal prices continued to fall and became a cheaper source of thermal coal in the Asian market, market participants said.

South African FOB Richards Bay derivatives volume rose 161% to 864,000 mt in February and 15% on the year, the data from LEBA showed.