LONDON Jan 23 (Reuters) – Prompt European physical
coal prices dipped by around 50 cents on Monday as the absence
of Chinese players due to the New Year holiday began to be felt,
traders and utilities said.
Minimal European demand and a hiatus in Chinese buying
should be strong enough factors to pull DES ARA European prices
below the support level of $100 a tonne during the next two
weeks, from $105 currently, they said.
Oil’s strength is expected to limit coal’s potential to fall
due to weak fundamentals but with key buyers out of the market,
some further price falls were highly likely in the very
near-term, traders said.
Firm oil prices, mostly due to supply concerns, have masked
the effect of poor coal fundamentals. Oil retreated on Wednesday
as optimism, spurred by talk the IMF may do more to help resolve
the European debt crisis, proved shortlived, with a gloomy
demand outlook pressuring prices.
The FOB benchmarks for South African and Australian coal
have been more robust. South African prompt cargoes have been
bid higher by players counting on a resumption soon of Chinese
buying, while Newcastle prices tend to be resilient while annual
contracts with end-users are being negotiated.
Coal API2 and API4 swaps saw the quietest trading day of the
year so far, traders said.
“Swaps have done almost nothing, a lot of people are not
around – by 0930 GMT only one trade had taken place,” one
European trader said.
“Today is the first day of the Chinese New Year and the
buyers there are totally absent, won’t be back for two weeks so
that’s taken some support away from prices,” a utility source
said.
“A few aggressive players are bidding up South African
prompt cargoes in the hope that Asian buying will return after
the New Year but European demand looks appalling,” he added.
Continued…
