'Swimming' in coal next year?

'Swimming' in coal next year?

London (Platts)--10Apr2006

A European coal trader said buyers in Europe and Asia will be "swimming in
coal" next year, even as he acknowledged the current supply tightness that
keeps Richards Bay and Newcastle prices at high levels.

A Japanese coal trader said he expected coal spot prices to start softening in
July ? by which time it is expected that the fiscal 2006 thermal coal contract
price negotiations for Australian, Chinese and Indonesian coal in Japan shall
have been concluded.

The European coal trader said thermal coal producers in both Asia-Pacific and
South Africa who failed to fix term contracts for a majority of their
production next year will be "in trouble" next year when he expected the
additional supply from planned expansion will outpace increase in coal demand.

"From the way I see it, buyers will be swimming in coal next year," the
European trader said.

He said coal prices will start to come down from their current high levels
starting in July and will dip more next year.

The Japanese coal trader said "spot prices will start going down a little bit"
after the term contract price negotiations in Japan.

"Next year, it is expected that supply will be stronger than demand," the
Japanese source said.

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