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Saturday, January 28, 2012

Dollar fall boosts Euro coal prompt prices

Saturday, 28 Jan 2012

Reuters reported that US dollar fell to its lowest for almost two months on Thursday, giving a sharp boost to coal prices which have sagged this month due to weak fundamentals globally.

Two March loading South African cargoes traded early in the day at USD 108.50 and USD 108.75, up over USD 3.00 from Wednesday, bought by banks and traders, sold by a large, international trading house.

Coal swaps rallied on Thursday, bolstered by European utilities hedging dark spreads (the profit margin from using coal to generate power) and oil's rise, despite the lack of physical buying and high stockpile levels.

End users in Europe and Asia remained noticeable for the absence from the market.

Traders said that whether China resumes large scale spot buying after the New Year holidays is absolutely critical for coal price direction, regardless of the gyrations of the swaps market.

China overtook Japan as the world's largest coal importer last year after a surge in imports in the last quarter to a total of 182.4 million tonnes, nearly 11 percent up from the previous year, much of it bought on a spot basis.

One European trader said that "The dollar got hammered overnight and that's pulled commodities up including coal, but the swaps, particularly the Calendar years, have risen even more.”

(Sourced from Thomson Reuters)

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