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European and South African coal prices dipped by around USD 1

Steel News - Published on Thu, 10 May 2012

Reuters reported that European and South African coal prices dipped by around USD 1 to fresh lows on May 8th 2012, a move which drew out buying by traders rather than end users.

European DES ARA prices hit two year lows last week and have slipped a little further, pressured by oversupply.

Many players in the coal market have seen USD 90, USD 85 and USD 80 as psychologically important levels because the market consensus at the start of the year was that prices would not drop below USD 100 a tonne.

Utilities and traders said that prices may have a few dollars more to fall but should start to correct and settle at around the USD 90 to USD 100 mark.

Mr Marcus Garvey analyst with Credit Suisse said that \"There is clearly now upside room for coal demand in Europe but if dark spreads (profit for generating using coal) weren\'t so in the money against sparks (profit for generating from gas) we could have seen an even worse picture for coal than the one we\'re currently experiencing.\"

Some power plants in Germany, the UK, Spain, Portugal and Italy, are running at high capacity because cheap carbon, expensive gas and relatively cheap coal makes coal fired generation an obvious choice, bolstered by renewable in the summer. But most of these utilities are carrying high inventories and are unlikely to return to the spot market in 2012 or for minimal quantities if they do.

One major European trader said that \"I would say the main reason we are burning more coal is that coal prices have fallen much faster than power prices, which says something about coal oversupply rather than a slump in demand.\"

Some Indian importers are also poised to buy spot South African cargoes now that prices have started to weaken.

One importer said that \"South African is still the preferred coal for most cement plants and if it is cheap enough then they will take that instead of trying new origins.\"

Source - Reuters


Posted By : admin on Thu, 10 May 2012
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