South African steam coal prices rise as buying picks up

Saturday, 07 Jan 2012
Reuters reported that South African physical prompt coal bids rose by around USD 1 per tonne recently as buyers began to emerge after the end year holiday hiatus.

Traders and utilities said delays of two weeks to Colombian coal shipments by Drummond and Prodeco, two of the country's biggest exporters, were a minor price-supporting factor which could turn into a more significant influence if the rains persist.

Drummond and Prodeco mines in the north of the country where rainfall has been heaviest are neighboring but Colombia's biggest exporter, Cerrejon is seeing delays of only 2-3 days on average and met its 2011 export target of 32 million tonnes.

One European utility source said "Drummond is seeing the worst delays of around two weeks, Prodeco almost as bad but even though Prodeco's coal is high-grade and some is specialist pulverised coal for steelmaking, it is important and it does matter to the market."

In the European DES ARA market a few more players were seeking February and March delivery cargoes but there was more interest in January loading South African cargoes.

Some Indian buyers enquired about Q1 cargoes FOB Richards Bay, partly concerned by indications from Indonesia that an export takes on low energy content coal will be imposed this year ahead of a proposed ban on low energy coal exports in 2014.

But traders also bid for and bought January Richards Bay cargoes, some to cover short positions, others because the very prompt market looked strong, although this could fizzle out quickly.

A European trader said "There are some shorts in the market looking for Colombian cargoes, very prompt Richards Bay, mostly traders rather than consumers."

(Sourced from Reuters)