* Coal must rise $50/T to displace Europe gas
* Prices to remain subdued – Credit Suisse
LONDON, July 12 (Reuters) – South African physical prompt
coal prices dropped by $1 to $3 a tonne on Thursday, pulled
lower by heavy selling in the swaps market, while buyers stayed
on the sidelines.
South African bids fell by around $3 to $82-$83 a tonne FOB,
a level close to the two-year low of $81.13 reached in mid-June.
“A support level is going to be found soon. We’re close to
it now and I don’t think there’s much room to fall,” one
European trader said.
API4 coal swaps sold heavily throughout the day, in line
with weaker power prices and helped pull
physical prices lower.
Indian buyers, who had bought fairly heavily when South
African spot prices were close to two-year lows in June,
largely retreated when prices nudged $90 last week, and their
withdrawal has trimmed a few dollars from prices, trader said.
The outlook for global demand, however, was seen as fairly
robust because the coal burn in Europe has been exceptionally
strong in the traditionally weak summer months, while India and
China had been steadily importing.
Coal prices would have to rise by $50 a tonne delivered into
Europe – in other words to rebound to $145 from current levels –
to make gas-fired power plants as profitable as coal-fired
generation, Reuters data shows..
Continued…
