* Feb S.African prices boosted by tight supply
* Weak power, gas erodes DES ARA values
LONDON Jan 17 (Reuters) – Prompt South African coal
prices rallied by around $3 a tonne on Tuesday as players
covered short positions, but this strength was unlikely to last
unless China resumes heavy buying in February, traders and
utilities said.
Chinese importers have been out of the market for the past
few weeks and are not expected to return until after the New
Year holidays, but a few have been quietly re-selling cargoes
since last week.
European DES ARA prices, by contrast, were little changed
with few bids or offers seen.
Coal prices have been supported to a large degree by strong
oil prices, which have prevented what could have been a much
steeper slide in coal values since December.
Oil’s resilience, due to supply concerns for the most part,
has masked the effect of poor coal fundamentals. Oil edged
higher on Tuesday to $111.50 a barrel, bolstered by a weaker
dollar.
“ARA is a little softer, but there’s a bit of a temporary
squeeze on February South African cargoes,” one European trader
said.
The weak economic environment in Europe, slower growth in
Asia and the warm European winter have combined to cut coal
demand, they said.
Continued…
