South African steam coal prices rise

Tuesday, 21 Feb 2012

Reuters reported that 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.

A March South African cargo was bid at USD 108.00 and offered at USD 110.00, up 50 cents on the bid.

An April South African cargo was bid at USD 105.35 and offered earlier at USD 105.90, up 40 cents.

A March DES ARA multi-origin cargo was bid at USD 96.00 and offered at USD 99.00, unchanged.

An April multi-origin cargo was bid at USD 99.00 and offered at USD 100.05, down USD 1.00 on the offer but unchanged on the bid.

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.

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.

(Sourced from Reuters)