* Mar S.African tightness seen temporary
* Little sign of fresh Indian buying
LONDON Feb 20 (Reuters) – Prompt South African
physical coal prices rose by around 50 cents on Monday as market
participants tried to cover short positions taken at the end of
last year amid tight supply for March in particular, traders
said.
Front-month South African coal prices FOB Richards Bay have
held a premium over subsequent months since January for the same
reason and despite weak demand in Europe and Asia.
“This is a temporary imbalance and not a good barometer of
the market, it’s just the front month and is a short-term
squeeze,” one European trader said.
Players among banks, traders and utilities late last year
sold coal swaps and physical in anticipation of being able to
buy back at cheaper prices.
Although coal values have been dropping while China has
remained out of the spot market, there is still some
short-covering, which needs to be done and sellers are reluctant
to offer while there’s a chance Richards Bay prices will keep
ticking higher.
Some Indian enquiries for prompt South African coal were
seen but no fresh trades – Indian buyers said they are keeping
tabs on prices and waiting for a drop closer to or below $100.
The European DES ARA market is probably a better indicator
of the market’s strength, traders said.
Continued…
