LONDON, Oct 23 (Reuters) - Prompt physical coal prices
dropped by up to $1.00 a tonne on Tuesday in line with oil's $2
a barrel fall on concerns about slowing economic growth and the
eurozone debt crisis.
Brent crude futures fell more than $2 to the
100-day moving average on Tuesday.
Despite the coal price fall on Tuesday, prices have remained
in the same range of $82-$88 for several weeks and activity has
been limited.
The outlook for in the next month is a little bearish
because spot demand from major buyers India and China has been
slow to revive after the summer hiatus.
End-users and suppliers agree that the slump which pushed
prices to nearly three-year lows for South African prices last
month is nearly over with perhaps a few more dollars to fall
before a slow recovery begins.
"We're either at the bottom of the market yet or very close
to it," one producer said.
A November loading South African cargo was bid at $79.60 a
tonne FOB Richards Bay on Tuesday, a price level which was seen
as an indicator of market weakness by some players.
At $80/T or lower, some of the smaller South African
producers will be making losses or close to their marginal
costs, industry sources said.
The squeeze between soaring mining costs and slumping
commodity prices has already spurred output cuts in the U.S.,
Russia, Indonesia and Australia, who number in the world's top
ten coal exporting countries.
But not enough production has yet been cut to compensate for
sluggish demand growth and support prices.
Hedge funds, who were starting to become actively involved
in trading coal swaps and dabbling in coal equities, have all
but vanished from the market this year because of static prices.
"There's very little appetite to do business still, mostly
the same few players, so the spot market is very quiet," one
European trader said.
TRADES
A January delivery DES ARA cargo traded at $87.00, down 50
cents from Monday.
A November DES ARA cargo traded at $85.00, down 50 cents.
PRICES
A December DES ARA cargo was bid at $86.25 and offered at
$87.00, down $1.00.
A November loading South African cargo was bid at $79.60 a
tonne and offered at $79.90, down 60 cents on the offer.
A December South African cargo was offered at $82.00, also
slightly lower.
(Reporting by Jacqueline Cowhig; Editing by Anthony Barker)
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