Coal news and updates

ATLANTIC COAL: Spot prices rise to fresh multi-month highs in thin trading

European-delivered CIF ARA thermal coal spot prices rose Monday despite a quiet trading session due to most players being in Berlin for a major industry gathering.

 Platts assessed the price of CIF ARA thermal coal basis 6,000 kcal/kg NAR for delivery within the next 15-60 days, November 5-December 19, at $85.75/mt, up $1 from Friday, and a fresh seven-month high.

 Participants said that no trades were heard in the market Monday as the majority of players were attending the Coaltrans World conference in Berlin, which lasts until Tuesday.

 However, spot coal prices kept ticking higher, moving past $85/mt, a price which many players last week believed would see sellers come in and make firm offers.

A London-based trader said that at these price levels, he would also normally expect people to sell because in his opinion, "there is no real shortage of coal -- just sellers waiting for the right level."

 However, as CIF ARA prices have kept creeping higher and no offers were reported in the brokered market Monday, the trader said that sellers may want a higher number now, as they see a rising coal derivatives market and buyers accepting higher values for the fuel.

 But other sources attributed the lack of offers to the industry gathering sapping liquidity, adding that there will be a clearer picture of the price direction when more of the market comes back.

 While no bids and offers were reported for November-delivered cargoes, December was bid at $85.75/mt, $1.75 higher than a Friday trade for that month.

 Further out, January was bid at $85/mt.

 RICHARDS BAY FOB SURGES TO FIVE-MONTH HIGH

 Meanwhile, prices in the South African thermal coal market shot up almost $3 compared with Friday to near five-month highs due to a perceived lack of willingness from sellers to put Richards Bay 6,000 kcal/kg NAR material on offer, sources said.

 Platts assessed FOB Richards Bay coal basis 6,000 kcal/kg NAR for loading within the next 7-45 days, October 28-December 4, at $82/mt, up $2.95 from Friday and at its highest level since late May.

 A European trader said that this rise in Richards Bay FOB prices did not appear to be "consumer-driven," as the coal would not price into the majority of the markets at these high prices, but rather that "nobody wants to sell".

 He said that, at the same time, there is only one buyer putting in bids, which might be attributed to the player being short of material and willing to pay a premium for prompt vessels.

 The London-based trader said that these prices are "historically good levels for sellers," so it is surprising that there is not much tonnage on offer.

 Both sources said that stock levels at Richards Bay Coal Terminal remain high, but the London-based trader said he understood that the material might be mostly off-spec quality, which would account for the shortage of Richards Bay 6,000 kcal/kg NAR coal.

 November-loading cargoes were bid at $81/mt to offers of $83/mt, compared with a Capesize vessel trading Friday at $80/mt for the same month. December, meanwhile, was bid at $83.50/mt and offered at $84.40/mt. The last December trade on Friday was at $82.45/mt.

 After 1700 BST (1600 GMT), two 25,000 mt South African origin cargoes for January loading traded at $86/mt and $86.20/mt via the globalCOAL screen, almost $2 above similar trades on Friday.

 NEARBY ATLANTIC COAL SWAPS RISE TO FRESH MULTI-MONTH HIGHS

 In the Atlantic coal derivatives market, the front-end led swaps rally continued Monday, with nearby Richards Bay FOB contracts outpacing their European counterparts due to the strength of the South African physical market, sources said.

Platts assessed the API4 Q1-14 swaps up $1.65 from Friday at $87.55/mt, the highest API4 front-quarter contract closing level since February 22. The API4 Cal-14 swap was assessed Monday at $84.05/mt, 70 cents higher than on Friday and its highest mark since June 19.

 The London-based trader said that most of the upward momentum in the swaps markets was due to an extension of the strength reported last week, with most of the trading interest shifting to the South African market.

European CIF ARA swaps also rose to fresh highs Monday, with sources still citing a perceived shortness of coal supplies at the beginning of 2014 as the main cause for the strength.

 Platts assessed the API2 Q1-14 contract at $84.45/mt, up $1.30 from Friday, and at its highest level since May 9. The year-ahead Cal-14 contract was assessed at $84.15/mt, 50 cents higher.

 Implied freight (API2-API4) differentials narrowed further Monday due to the stronger gains in the South African market.

Front-quarter Q1-14 spreads lost 35 cents on the day to minus $3.10/mt and the year-ahead Cal-13 differential shed 20 cents to 10 cents/mt.


Source: platts