Coal Rises on Speculation Demand May Build as Reservoirs Fall - Bloomberg

European coal derivatives rose on speculation demand may strengthen in the region as countries cut nuclear output and reservoir levels fall.“The drivers in Europe are the nuclear shutdowns and low hydro levels,” Karim Kanji, director of coal trading at Barclays Capital in London, said by phone today. Prices are also gaining on a shortage of coal in China to meet summer demand, he said. The country is the world’s biggest coal user.
Coal delivered to northwest Europe with settlement next year rose 75 cents, or 0.6 percent, to $130.75 a metric ton by 11:17 a.m. in London. That would be the highest closing price since May 4.

French water reservoirs were 59 percent full at the start of this week, Electricite de France SA said today. That’s down 12 percentage points from last year. Lower reservoir levels cut the amount of power that can be generated by water, possibly boosting use of other fuels.
The German Cabinet approved plans yesterday to close the country’s reactors by 2022, accelerating the nuclear exit of Europe’s biggest economy. Chancellor Angela Merkel ordered the halt of Germany’s seven oldest reactors in the second half of March following a meltdown that month at Japan’s Fukushima Dai- Ichi plant after an earthquake and tsunami.

Norwegian Reservoirs
Nuclear power accounted for about 23 of German generation last year, while France gets about 20 percent of its supply from running water through turbines. Reservoirs in Norway, where hydropower plays a bigger role in the energy mix than any other European country, were 37.9 percent full in the week to the end of May, according to data from the Nord Pool Spot AS exchange. That compares with a 44.7 percent median since 2009.

China faces a power shortfall that may extend to 40 gigawatts this summer, surpassing the country’s 2004 record, according to State Grid Corp. of China. A gigawatt is enough to supply 1 million U.S. households on average. China boosted coal imports 64 percent in the two months through April.
China is studying a plan to cut the 17 percent value-added tax levied on coal imports, National Business Daily reported today, citing an unidentified official at the National Development and Reform Commission.

Profit from running coal-fired power plants for next month, the so-called clean-dark spread, is about 7.12 euros ($10.45) a megawatt-hour, compared with 3.19 euros from burning natural gas, Bloomberg data showed. The calculation uses electricity prices in Germany and takes emission costs into account.
December carbon-dioxide permits under the European Union cap-and-trade system fell 0.2 percent to 16.65 euros. Gas for delivery in the six months through September 2012 to the U.K., Europe’s biggest consumer of the fuel, rose 0.3 percent to 65.9 pence ($1.08) a therm in London.

The coal-derivative data are drawn from information supplied by ICAP Plc, GFI Group Inc., Spectron Group Ltd., Credit Suisse Group AG, IHS McCloskey, Bloomberg, Tradition Financial Services and Tullett Prebon Plc.