Coal prices advance as oil price increases

In South Africa, Richards Bay Coal Terminal saw spot prices for coal improve with GlobalCoal’s Weekly Index up from US$101.72 to US$102.81 on 2 December 2011. The terminal exported 6.3Mt of coal in November, down from the previous month’s 7.4Mt. Around 2.8Mt was shipped to China, surpassing India as no. 1 offtaker. At the end of November, the terminal had 3.6Mt of product in stock. “China has not totally stopped buying - the vessel line ups show strong underlying demand and regular large shipments,” said a major trader to Reuters. He reported selling regular cargoes to China for the past several months.

In Newcastle, Australia, the index slipped from US$111.98 to US$111.29 on 2 December while in Europe a similar trend was observed. The DES ARA contract lost ground and was down from US$112.18 to US$111.60.

US coal prices held firm with Powder River Basin (8,800Btu/0.8 SO2) product rising slightly from US$12.55 to US$12.90 over the week.

However, on Monday 5 December, physical prompt coal prices moved up by around US$0.25-0.50 as the oil price advanced. While demand from Europe remained modest, China and India are providing some pull. “Oil’s been the driver again, fundamentals are taking a back seat but the gap between API4 swaps and Richards Bay prices is too wide again and that’s putting off buyers,” one exporter said.