Friday, 25 Feb 2011
Prompt physical coal prices rose around USD 2.00 on Tuesday following another hike in oil prices due to continued Libyan unrest but Australian FOB Newcastle prices soared to USD 147.50, up from a trade at USD 132 earlier in the day.
Newcastle FOB prices have risen by around $15.00 in the past 10 days on tight supply. Libyan unrest and rising oil prices have been the main drivers behind the general coal price rise but the Newcastle market seems genuinely tight and set for higher prices, far stronger than the South African or delivered Europe markets. Australian coal supply is still recovering after floods earlier in the year and producers as well as end-users and traders are seeking prompt cargoes. This was helping to keep Newcastle prices firm before the violent protests erupted in Libya.
VTB Capital Research said that "Prices rose 40% due to Queensland flooding and have now consolidated, but with increased Chinese and Indian demand likely in the remainder of the year, we think the market will tighten further and move higher again. A lot of companies we've never heard of, Indian and Chinese firms mostly, have been in the market looking for South African, Indonesian, Australian coal, at cheap prices because they don't believe the current Newcastle numbers.”
Newcastle FOB prices have risen by around $15.00 in the past 10 days on tight supply. Libyan unrest and rising oil prices have been the main drivers behind the general coal price rise but the Newcastle market seems genuinely tight and set for higher prices, far stronger than the South African or delivered Europe markets. Australian coal supply is still recovering after floods earlier in the year and producers as well as end-users and traders are seeking prompt cargoes. This was helping to keep Newcastle prices firm before the violent protests erupted in Libya.
VTB Capital Research said that "Prices rose 40% due to Queensland flooding and have now consolidated, but with increased Chinese and Indian demand likely in the remainder of the year, we think the market will tighten further and move higher again. A lot of companies we've never heard of, Indian and Chinese firms mostly, have been in the market looking for South African, Indonesian, Australian coal, at cheap prices because they don't believe the current Newcastle numbers.”
Annual Japanese price settlements are widely expected to match or even exceed 2008's record USD 125 per tonne FOB because the Pacific market is set for tight supply and strong demand overall this year More than 8% of Libya's 1.6 million barrels per day of oil production has been shut down by the political violence and the country's marine terminals were disrupted by a lack of communications Physical coal supply and demand has been unaffected by events in Libya shipping has not been disrupted and Libya neither exports nor imports coal.
Traders and utilities said that but the coal market is sometimes extremely sensitive to moves in other energy markets, particularly oil, and that is the case at present because there are still many players with long positions to defend against slumping prices.
One European market source said that "It's all Libya again, Libya and higher oil prices which means higher coal prices but hardly anybody's buying coal.” (Reuters)
Tags: VTB Capital Research, Chinese, Indian demand
Traders and utilities said that but the coal market is sometimes extremely sensitive to moves in other energy markets, particularly oil, and that is the case at present because there are still many players with long positions to defend against slumping prices.
One European market source said that "It's all Libya again, Libya and higher oil prices which means higher coal prices but hardly anybody's buying coal.” (Reuters)
Tags: VTB Capital Research, Chinese, Indian demand
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