September 14, 2017 / 11:49 AM / a year ago

BUZZ-European API2 2018 coal futures rise to $83.90 a tonne, highest since May 2014

LONDON, Sept 14 (Reuters) - * European API2 coal futures for 2018 rose to $83.90 a tonne on Thursday, their highest level since May, 2014. * Critically low inventories in Europe, China and India, improved macro-economic conditions and fears over French nuclear outages this winter stoking coal demand across Europe helped spur prices, traders and analysts said. * “Inventories in Europe, India and China are critically low and this makes the market nervous as we are going into the seasonal cycle of restocking, which can start as early as the end of August and lasts about two months,” said Georgi Slavov, head of research at Marex Spectron. * “A lot of coal is going from mines directly into inventories - not consumption,” he said. * API2 prices have rallied 32 percent since mid-May, confounding bearish forecasts as Atlantic and Pacific supply improved while demand in China and India tailed off from highs seen earlier this year, Slavov said. * Nick Campbell, risk manager at consultancy Inspired Energy, said: “The back drop was already somewhat bullish with the falling U.S. dollar and requirement of Chinese utilities to cover off lower domestic production and low hydro generation.” * Chinese coal production fell in August to a 10-month low as producers reduced output after Chinese authorities increased safety checks at mines in response to a string of major accidents. * Campbell added that concerns over Australian coal export curbs could lead to arbitrage opportunities for European traders to send coal to China, a major importer of Australian coal. * Another trader said European coal prices were also reacting to the risk of French nuclear power plants being idled this winter as nuclear regulators step up safety checks. * Any disruption to French nuclear output this winter would likely ripple through other European markets reliant on French supplies. (Reporting by Oleg Vukmanovic and Susanna Twidale; editing by Jason Neely)

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