Cargill says it is quitting global coal, European power and gas trading

London (Platts)--27Mar2014/858 am EDT/1258 GMT


Commodities trader Cargill's Energy, Transportation and Metals division has closed its global coal and European power and gas trading businesses, the company said Thursday.

The shutdown, which is effective immediately, comes "after a thorough review of [Cargill's] strategy to offer distinctive, long-term value to its customers," the company said in a statement. "Significant changes in the coal and European power and gas markets have led Cargill ETM to withdraw from these two sectors."

Cargill said the ETM division would continue to operate in the petroleum, petrochemicals, iron ore and steel, ocean freight and North American gas and power markets.

"We will not take on any new business, but we will continue handling any existing business and execute our existing commitments," a Cargill spokesman said of the discontinued trading operations.

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Cargill has been active in physical and financial thermal coal trading and risk management for several years, principally out of Geneva and Singapore.

Spot 60-day prices in the European-delivered CIF ARA market -- the most liquid thermal coal market -- have fallen by 9% since the start of the year to to close at $75.60/mt Wednesday, just above a three-year low set at the end of February.

Cargill also was active in trading, risk and supply chain management for European gas and power producers, pipelines, storage facilities, distributors, utilities, aggregators and industrials, according to the company's website.

Gas markets covered included Germany's Net Connect and Gaspool, the Netherlands' TTF, the UK's NBP, Belgium's Zeebrugge and the French PEGs. Services in gas comprised standard and non-standard OTC products, supply to the German grids, financial swaps for the Dutch and German markets and oil-indexed gas formulas.

In power, Cargill was involved in German and French electricity markets, providing physical and financial services, product swaps, time swaps and risk management solutions.

Cargill also trades European carbon products, EUAs and CERs.

The spokesman did not say whether carbon markets were included in the withdrawal, but the company's Energy Europe factsheet indicates that carbon falls within the same division as European gas, power and global coal.

--Gareth Carpenter, gareth.carpenter@platts.com and Anna Crowley, anna.crowley@platts.com
--Edited by Jeff Barber, jeff.barber@platts.com

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