Euro Coal-Prices stable, Japan coal diverted to China

Mon Mar 21, 2011 3:19pm GMT

* Indonesian shipment diverted to China

* Indians also look for bargains

* German utilities buying supports DES ARA price

LONDON, March 21 (Reuters) - Prompt physical coal prices were little changed on Monday after volatile trading last week following the Japan earthquake and tsunami.

The market is re-adjusting to the immediate oversupply of coal in the Pacific which Japan cannot currently take but sellers are trying to avoid slashing prices while diverting cargoes.

South Korea, China and India have all taken some Australian and Indonesian coal originally destined for Japan but there are no firm figures available yet on the quantities involved,
traders said.

"There's a lot of coal out there both in the Pacific and in Europe and while there are some diversions nobody really knows exactly what's going where yet," one European trader said.

An Indonesian coal shipment intended for Japan has been diverted to China, the Indonesian Coal Mining Association said on Monday.

While the immediate impact of the quake and tsunami has been bearish for coal, longer-term the outlook is less clear, Barclays Capital said in its monthly coal and freight outlook on
Monday.

"If coal plants and transport infrastructure can be restored to some extent, incremental demand for coal from nuclear outages may be offset by lower underlying demand, with a net neutral
effect," BarCap said.

"But if import infrastructure is closed for much longer, coal imports will remain low," the report said.

European coal futures for 2012 have risen more than seven percent since an earthquake and tsunami shut some Japanese nuclear power plants, events likely to force the country to burn
more coal.

European gas prices have surged since disaster struck Japan on March 11, increasing the country's already voracious appetite for liquefied natural gas, but its coal-fired power plants are
also expected to gobble up more coal.

News that Germany will shut down all seven of its nuclear power plants that began operating before 1980 at least till June because of the Japan crisis is also likely to drive up German
demand for coal.

PRICES

A June delivery DES ARA cargo was bid at $124.00 and offered at $130.00, up $1.00 on the offer.

A July cargo was bid and offered at $129.00, unchanged, but did not trade because the bid was for Amsterdam-Rotterdam delivery and the offer for Rotterdam only.

A May loading South African cargo was bid at $122.25 a tonne, little changed.

A June South African cargo was bid at $119.50 and offered at $130.00, also little changed.

(Reporting by Jackie Cowhig; editing by Jason Neely, Reuters)