European coal futures rose on Monday to their highest level in almost a year, lifted by higher oil prices and a weaker US dollar.
European coal futures rose 3.3 percent from the previous settlement to $57 a tonne at 0839 GMT — their highest level since July 31, 2015.
Rising oil prices and a weaker US dollar against currencies in coal production countries have helped push coal prices up, a coal trader said.
Coal futures have been mostly gaining ground for the past couple of months, driven by rising cash costs from stronger diesel prices and higher carbon prices.
Following years of falling prices, with coal futures tumbling over 80 percent between 2008 and 2016, producers have cut back investment into new capacity and closed down unprofitable mines tightening supply.
Chinese domestic supply has fallen, driving up seaborne prices through the import arbitrage and supply disruptions in Indonesia have also added to gains.
Oil prices have virtually doubled and a weaker US dollar has made imports of fuels like oil and coal, which are traded in US dollars, cheaper for countries using other currencies at home, spurring demand.
Oil extended gains in Asian trading on Monday as a weaker dollar and easing concerns over Britain’s possible exit from the European Union helped support crude prices.
Against the dollar, the euro gained 0.7 percent to $1.1353 , helping to push the dollar index down 0.6 percent to 93.589.
In the long term, however, the outlook for the thermal coal market has not changed much because global demand continues to fall, production curbs might be difficult to enforce if prices continue to rise and there is a glut of liquefied natural gas on the horizon, analysts said.
Physical coal contracts had not traded at the time of writing.
Source: ReutersPrevious Next