Germany’s largest program of solar and wind energy production has European coal prices below South Africa for the first time in 10 months. Coal in Northwestern Europe costs $ 3.55 a metric ton less than deliveries from South Africa’s Richards Bay yesterday, the biggest discount for the next month prices since May 5, 2010, according to IHS McCloskey data. The difference is likely to continue as European demand weakens and Asia stimulates imports from South Africa, according to Barclays Plc.
“The producers themselves whether this is a landslide, and I think that this step probably is sustainable,” said Bevan Jones, general manager at London Commodity Brokers Ltd which commodities traded for more than 15 years at companies including Anglo American Plc , Rand Merchant Bank and Global Coal Ltd. “Europe is well supplied by the U.S., Colombia and Russia, while the demand on his weak side. Meanwhile, the consistent demand in Asia,” he said by phone from Johannesburg on February 3.
Coal prices in Europe fell by 7.5 percent this year as countries the amount of energy they get from alternative sources. Germany, the continent’s largest energy market, installed a record 3,000 megawatts of new solar panels in December, the Bonn-based Bundesnetzagentur, the network regulator, said. Coal stocks at the largest warehouse in the Netherlands are 6.7 percent above the level a year ago, according to european-Bulk Cargo Transhipment BV, which operates the terminal.
European Contract Falls
Coal for next month delivery to Europe’s Amsterdam-Rotterdam-Antwerp hub fell to $ 101 a barrel yesterday, the lowest since October 2010, according to data from Petersfield, England-based McCloskey. Richards Bay supplies were little changed for the year at $ 104.55 per tonne. European prices, freight costs have averaged $ 8.57 per tonne more than in South Africa since January 2008, the data show.
The export of German wind reached a record level 8 terawatt hours in December, the BDEW utility group said Jan. 11. The country is planning to at least 35 percent of its electricity from renewables by 2020, compared with 20 percent last year. A terawatt-hour is equal to approximately 10 percent of annual output at RWE AG Emsland nuclear reactor in Germany. A thousand megawatts can supply about 2 million European households.
Germany’s power demand fell about 0.5 percent to 607 terawatt-hours last year, with the production of electricity decreased by 2.5 percent to 612 terawatt hours, according to the BDEW.
Solar output of Spain rose 46 percent last year, and wind met a record 60 percent of the power of the country’s demand on November 6, according to Red Electrica Corp. SA, the country network.
Warm Winter
“The demand for coal is quite low at the moment,” says Hugo du Mez, a business developer for dry-bulk shipments at the Port Authority. A warmer than average winter in combination with rising solar and wind power production in Germany keep stocks high, he said by telephone on 30 January.
EMO, the largest dry bulk terminal in Europe is active, said its coal stocks in Rotterdam were 3.2 million tonnes on 6 February.
German imports will be less than 2 million tonnes this year will fall to around 45 million, Erich Schmitz, Director of Coal of the country Importers Association said on January 31 by phone from Hamburg. The nation imported 46 million to 47 million tonnes in 2011, less than the union’s August forecast for 49 million tons, he said.
China Coal influence
“European consumers will be very limited appetite for the prompt-market imports of coal, given the large stocks built up over the months of november and december,” Miswin Mahesh, an analyst at Barclays in London, said by phone Jan. 30.
China, which uses almost half the coal in the world, has more influence than ever over markets of the fuel, the International Energy Agency said on November 9. Marginal differences between coal production and demand, both of which are “very large”, the input to determine and influence the international markets, the Paris-based agency said in its World Energy Outlook.
South African prices are the cheapest in 20 months compared to those in Australia, the world’s largest exporter of the fuel, boosting the appeal of Richards Bay delivers for Asian buyers such as China.
The discount on the price of coal in Richards Bay in relation to Australia’s main export terminal in Newcastle, 98 miles (158 kilometers) north of Sydney, was extended to $ 13.23 per ton in the week to 03 February, according to McCloskey data.
“More expensive Australian coal prices higher, in combination with cheaper freight rates have encouraged Asia-Pacific buyers to look further afield for alternative sources,” Natalie Robertson, a commodity strategist at Australia and New Zealand Banking Group Ltd said on February 1, e Email from Melbourne. “Richards Bay seems to be a beneficiary of these conditions.”
source:businessweek
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