Europe bracing for Colombia's comeback

WITH a string of 2013 strikes hopefully in Colombia’s past, coal from one of its top export customers has dropped to a record low on anticipation that tonnage leaving the South American country will increase.
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Donna Schmidt

According to broker data put together by Bloomberg, with exports no longer choked due to recent operational, rail and loadout stoppages by Drummond, Fenoco and Cerrejon, coal for 2014 delivery to Amsterdam, Rotterdam and the European benchmark of Antwerp has fallen by about 0.4%.

The level is the lowest since it started trading in 2010, and is also the cheapest for a next-year contract recorded since December 2009.

Colombia is the largest coal provider to the European Union.

The strikes, which were largely over better pay and conditions, helped the industry overcome the impacts of depressed global production and demand. During the first half of the year, prices sank as much as 16%.

Nena AS coal analyst Diana Bacila told Bloomberg that supplies from Colombia to the EU should recover by the end of the 2013 after a total drop of 26% through June.

“I don’t see a risk of strikes for the rest of the year,” Bacila told the news service.

Cerrejon, Colombia’s largest coal mine, said earlier this week that whole-year output would be in line with its expectations, even though it suffered a month-long strike in February. Drummond crews are also back to work after a 53-day stoppage in July.

Combined, the Andean nation’s disruptions took about 8.5 million tons of production in Colombia. Full-year exports are expected to total 75 million short tons, according to a report last month by Deutsche Bank.

Colombia is the fourth largest worldwide coal exporter, and the largest coal producer in South America.

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