* More players optimistic prices are starting to recover
* Late Oct S.African cargo trades at $1.50/T premium
LONDON Oct 4 (Reuters) – Prompt physical coal prices rose
by as much as $1.00 a tonne on Thursday as traders bought to
cover short positions and on optimism that prices are starting
to recover from steep falls in the summer.
Prompt South African coal cargo prices dropped to a two-year
low of $81.65 a tonne in June due to oversupply and a withdrawal
by many buyers to the market’s sidelines while they waited for
prices to lower further.
Oversupply, particularly record U.S. thermal coal exports
which could be as much as 50 million tonnes this year, has
weighed on prices since Q4 2011 but the glut has been reduced as
producers have cut output.
High inventories in Europe, China and India still need to be
digested before restocking begins on a large-enough scale to
push prices closer to $100/T, where they were at the start of
the year, but some buying from leading importers is starting to
emerge.
Coal benchmark prices cover a 90-day window which reflects
the contango seen in the market all year (in a contango market,
forward months show higher prices than nearby) with an often
marked price difference between the first and third month.
The contango alone, now that December cargoes are included
in price assessments, has helped nudge prices closer to $90 from
the low $80s, traders and end-users said.
A second-half October loading South African cargo traded on
Thursday at $85.75 a tonne FOB Richards Bay – $1.00 higher than
Wednesday’s last trade and showing a premium of $1.50 a tonne
above November prices.
Continued…
