South African coal booked at $63mt

London (Platts)--20Feb2006

A European utility is understood to have booked half a capesize cargo of
premium quality South African coal for March delivery from a producer at
$62-$63/mt CIF ARA. 

South African supplies are described by market participants as very tight, and
there are unconfirmed reports that a number of major South African producers
have none left to sell for Q1. "They may have to rearrange their shipping
program, and postpone some cargoes if customers are willing to accept this,"
said one market source.

A utility source suggested that South African coal was beginning to lose
market share to cheaper Australian, Colombian and Russian coals. "South
African coal is no longer the marginal tonnage to Europe at this point," he
stated.

A sudden rise in spot freight rates to $17/mt for a Richards Bay to Rotterdam
capesize vessel has left European buyers feeling very nervous and some
suggested that FOB Richards Bay prices may have to weaken to accommodate
higher freight costs. According to shipbroking sources, the jump in freight
rates is because of stronger demand for iron ore cargoes from China. Energy
users have also been unnerved by the threat of guerilla attacks on oil
installations in Nigeria's oil producing region, which could lead to further
rises in oil and gas prices.

This story was originally published in Platts Coal Trader International.
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