* Mar S.African trades sharply higher at $108.75
* Swaps boosted by utility hedging, oil
LONDON Jan 26 (Reuters) – The U.S. dollar fell to its
lowest for almost two months on Thursday, giving a sharp boost
to coal prices which have sagged this month due to weak
fundamentals globally.
Two March loading South African cargoes traded early in the
day at $108.50 and $108.75, up over $3.00 from Wednesday, bought
by banks and traders, sold by a large, international trading
house.
Coal swaps rallied on Thursday, bolstered by European
utilities hedging dark spreads (the profit margin from using
coal to generate power) and oil’s rise, despite the lack of
physical buying and high stockpile levels.
End-users in Europe and Asia remained noticeable for the
absence from the market.
Whether China resumes large-scale spot buying after the New
Year holidays is absolutely critical for coal price direction,
regardless of the gyrations of the swaps market, traders said.
China overtook Japan as the world’s largest coal importer
last year after a surge in imports in the last quarter
to a total of 182.4 million tonnes, nearly 11
percent up from the previous year, much of it bought on a spot
basis.
“Show me anyone who wants to actually take delivery of this
coal at these prices rather than cover a short position or as
part of an API4 and Newcastle swaps play,” one major European
trader said.
Continued…
