March 2, 2016 / 6:18 PM / 4 years ago

THERMAL COAL-European futures hold near multi-year low on weak demand

* European API2 coal futures near May 2003 low

* India, China reduce reliance on imports

LONDON, March 2 (Reuters) - European thermal coal futures eased towards a 13-year low on Wednesday as weak demand in the region weighed on prices.

European API2 coal futures traded down 10 cents to $38.30 a tonne, having last month dipped to $36.30, the lowest level since May 2003.

European cargoes for nearby delivery into Amsterdam, Rotterdam or Antwerp (ARA) last closed at $45.80 a tonne, having fallen around 5 percent since the start of the year.

Marex Spectron said winter 2015/16 has so far been one of the warmest on record although March could see cooler than normal weather.

“This scenario would be associated with low rates of wind energy production,” the brokerage said, adding the combination of cold weather and low wind energy could be supportive of coal.

But the longer-term outlook for growth in European coal demand remained bleak, as traders said policy continued to support a shift away from coal power generation, as seen in Britain, where a carbon tax has penalised coal power generation.

Outside Europe, China and India have been key coal consuming markets, but a shift towards boosting domestic production to cut reliance on imports is also bearish for the global market.

“For new generation they will draw from their own coal,” said a trader. (Reporting by Sarah McFarlane, editing by David Evans)

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