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South African coal jumps and link seen to paper position

Coal News - Published on Thu, 24 Oct 2013

Reuters reported that South African physical coal rose in brisk trade on Tuesday, ranking as the top gainer in the coal markets and prompting talk that a major trading house was buying cargoes to back up a futures position.

Figures from screen based broker globalCOAL said that Physical coal to be delivered from South Africa in December last traded at USD 85.80, up USD 1.40 from Monday's settlement, while the January contract settled at USD 87.20, up over a dollar from the previous close.

The volume on globalCOAL for South African contracts amounted to 150,000 tonnes on Tuesday, more than double the usual figure.

One trader said that "A lot of people suspect that a major trading house has been making a strong effort to influence the paper markets by bidding up South African coal in the physical markets."

Trader said that "In terms of the physical market, it doesn't make a great deal of sense because of the higher cost of shipping coal from Richard's Bay than from the Atlantic and Pacific basins."

One analyst said that a trading house was likely to be taking a loss on the physical coal in order to cover a much bigger position in the futures market, a strategy that traders say has been deployed regularly in recent weeks.

Observers said that stockpiles of South African coal at the Richards Bay terminal will continue to grow in the coming weeks because of the likely play between the physical and derivatives markets.

Source – Reuters

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Posted By : admin on Thu, 24 Oct 2013
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