* Aug ARA trades at $87.70
* Russia, Indonesia start to trim output
* Macquarie cuts 2012 coal price forecasts
LONDON, June 22 (Reuters) – Prompt physical coal prices shot
up by over $1.50 a tonne on Friday, bid higher on both swaps and
physical led by a European utility, but the outlook during the
summer remains grim, traders and utilities said.
“Almost everywhere looks bearish from a macro perspective,
almost every origin of coal is close to pricing-in to Europe but
coal prices went up sharply today,” one utility said.
Until sufficient output cuts are made and U.S., Colombian
and Russian cargoes in traders’ hands are absorbed, the market
will be vulnerable and could drift back to recent two-year lows,
they said.
A lack of demand broadly speaking, has not been the problem.
Rather, the combination of an unexpectedly-high level of
U.S. exports, driven by the collapse of domestic demand, and the
shock impact of the fall in Chinese power use and high
inventories.
“There are over 9 million tonnes in inventories in
Qinhuangdao (China’s northern port from which coal is moved in
vast quantities to the energy hungry south), and usually the
normal level is 6 million, plus high inventories in southern
ports,” one producer said.
Continued…
