Thermal coal derivative volumes touch four-month high in Aug: LEBA

The volume of thermal coal derivatives traded and cleared by brokers affiliated to the London Energy Brokers Association rose to a four-month high in August as prices remained volatile in the Atlantic region, according to LEBA data Sept. 23.

The total derivatives volume traded and cleared in August was 32.3 million metric tons, up 4% on the month and 20% on the year, according to the data. LEBA represents FCA-regulated wholesale market brokers in the over-the-counter and exchange-traded European energy markets. The previous record high was at 35.05 MMt in March.

The volume of European CIF ARA derivatives traded and cleared in August was up 1% on the month to 25.2 MMt and increased 20% on the year, the data showed. It made up nearly 78% of the total derivatives volume traded and cleared in August.

Platts, part of S&P Global Commodity Insights, assessed CIF ARA 6,000 kcal/kg NAR coal prices at an average of $120.55/t in August, compared with July's average of $109.50/t. The prices moved in a range of $117-$123/t during the month.

According to analysts with Commodity Insights, "European power prices, atypically bullish throughout August, [were] underpinned by gas price strength and storage related supply concerns. Thermal generation surged as renewables declined across Europe, and upside to power prices has been strongest in Southern Europe, thus weighted to gas rather than coal."

"With both hydro and solar generation recently coming off historically high levels and robust nuclear supporting sustained length in France, German power markets have been leaning on increased imports to match demand rather than providing significant uplift to coal generation," the analysts said.

The analysts also said that the "Delivered European thermal coal prices closed out August around $118. CIF ARA averaged $120.6, up $13 from the previous month as spot physical thermal coal prices continued to track movements in natural gas markets."

FOB Newcastle derivatives volume edged higher in August compared to the previous month due to increased demand from Asia-Pacific buyers. The FOB Newcastle derivatives volume was up 33.7% on the month to 6.3 MMt, a 12.7% increase compared with the year-ago month, according to LEBA.

South African FOB Richards Bay derivatives volume also fell 50% to 667,000 t in August, but more than doubled from the year-ago month, the data showed.