EU Coal Imports May Decline Less Than Expected, Barclays Says

European Union coal imports may next year decline at a slower pace than previously expected, partly because of higher demand from new German power stations in the second half, according to Barclays Plc.

Imports will drop 1.2 percent to 171 million metric tons from 173 million this year, Trevor Sikorski, an analyst at the bank in London, said today in an e-mailed research note. In September, the bank forecast imports would fall 6 percent to 166 million tons from 176 million, he said today by phone.

European prices may not rise next year as global exports advance 4 percent after surging almost 11 percent in 2012, Barclays said. Front-year coal for northwest Europe dropped 15 percent in the past year, according to broker data compiled by Bloomberg.

This year “will be remembered as a year that has been very good for the supply side of the coal market, with exports from all the major exporters up 14 percent year on year over the first seven months,” Sikorski said in the note.

Northwest EU coal may average $95 a ton next year, 2.2 percent higher than the bank’s previous estimate, Sikorski said. The front-year contract has averaged $103.15 this year, the broker data show. It rose 1.4 percent to $96.60 a ton today at 10:28 a.m. in London.

High oil prices will boost coal mining and transport costs, the analyst said. Without that increase, Sikorski said his forecast would have been for about $89 a ton.

Fourth-quarter 2013 EU coal at $100 a ton “looks overpriced against our expectations,” Sikorski said. That contract fell 1 percent yesterday to $99 and hadn’t traded today.

European hard coal consumption climbed 3.6 percent during the first seven months of 2012, Sikorski said. Lignite use rose 2.9 percent.

New plants will add some 4 million tons to hard coal demand for Germany in 2013 and 5 million in 2014, the analyst said. Coal imports may fall in Europe and China through 2014, he said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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