Coal Probably Close to Peak, SocGen Says: Technical Analysis - Bloomberg

European coal is probably close to a peak, according to technical analysis by Societe Generale SA.

The attached chart shows a resistance level of $128.30 a metric ton for coal derivatives, indicated by the trend lines. Coal for delivery next year to northwestern Europe rose 50 cents, or 0.4 percent, to $126.50 a metric ton by 1:46 p.m. in London.

Prices have climbed 5.2 percent this year on supply disruptions after floods hit Australia’s Queensland state in January, and as fossil-fuel demand increased as an alternative to nuclear generation in Germany and Japan following the Asian country’s March 11 earthquake and tsunami.

Coal will probably peak at $128.30 this week and then decline, Carine Hemery, an analyst with Societe Generale in Paris, said by phone yesterday.

Profit from running coal-fired power plants for next month, the so-called clean-dark spread, is about 7.71 euros ($10.95) a megawatt-hour, compared with 9.70 euros from burning natural gas, Bloomberg data showed. The calculation uses electricity prices in Germany and takes emissions costs into account.
Carbon Dioxide

December carbon dioxide permits under the European Union cap-and-trade system fell 0.7 percent to 16.53 euros in London as regulators prepared to sell phase-three allowances, which runs from 2013 to 2020, for the first time this year.

Gas for delivery in the six months through September 2012 to the U.K., Europe’s biggest consumer of the fuel, gained 0.6 percent to 63.10 pence a therm in London.

The coal-derivative data are drawn from information supplied by ICAP Plc, GFI Group Inc. (GFIG), Spectron Group Ltd., Credit Suisse Group AG, IHS McCloskey, Bloomberg, Tradition.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

To contact the reporter on this story: Alistair Holloway in London