rb prices back up above $87

Euro Coal-Prices rise $1-2, ARA trades at $90/T

* Aug ARA trades at $89.25/T, Sept trades at $90/T

* Market uncertainties discourage short selling

(Reuters) - Prompt European physical coal prices rose by $1-2 U.S. dollars a tonne on Tuesday as the market continued to look for clear direction.

Two European delivery DES ARA cargoes traded at $89.25 and $90.00 a tonne, both bought by traders but prices have been creeping higher during the past week, bid up by a European utility.

"Fundamentally it's looking very slightly stronger but nobody wants to sell at the moment because there are just too many variables which could move prices in the next few months," one European trader said.

Fresh spot demand in Europe remains minimal despite a strong coal burn in key consumers Germany, Spain and the UK and availability of high-quality thermal coal is tight and some production cuts have already been made, which are price-supporting factors.

There is also some expectation that oil will rebound back above $100 and pull coal up with it, which is discouraging players from selling coal short at present, traders said.

On the downside, there is a great deal of uncertainty about China's likely imports this year.

Analysts are forecasting strong imports for the year as a whole, including the first-half buying spree which has inflated inventories and clogged ports but the uncertainty stems from signals that China's economic growth could be slowing more than anticipated.

If this turns out to be the case, assumptions about China's imports could need to be revised down and prices will not recover in the second half, they will fall.

TRADES

An August loading South African cargo traded at $86.95 a tonne FOB Richards Bay, down over $1.00 from Monday's bid level.

An August DES ARA cargo traded at $89.25 a tonne, up around $1.25 from Monday's bid level.

A September ARA cargo traded at $90.00, also up around $1.00.

PRICES

A July loading South African cargo was bid at $87.25, up $2.25.

An August South African cargo was bid at $86.50 and offered at $86.80, down $1.50 on the bid. (Reporting by Jacqueline Cowhig; editing by Keiron Henderson)

http://www.reuters.com/article/2012/06/26/markets-coal-physical-idUSL6E8HQH5Z20120626