Euro Coal-Prices creep 25 cents higher with oil, gas
LONDON: Physical prompt South African coal prices rose marginally by around 25 cents to $91.25 a tonne on Monday, in line with oil's rally to its highest level since May and stronger gas prices.
Bids and offers crept higher but no fresh trades were reported.
Oil rose to $115 a barrel on Monday as concern about supply and hopes that governments will roll out more stimulus measures outweighed signs of weakening demand.
British wholesale gas prices also rose as the system opened under-supplied.
A 22-day strike by workers on Colombia's Fenoco railway which moves coal to port for Drummond, Goldman Sachs and Glencore's Prodeco, has forced Drummond to sharply cut production, the company said in a statement on Monday.
Drummond has been declaring force majeure on a cargo-by-cargo basis for over a week after inventories at its port were loaded and shipped - using trucks instead is not an option, industry sources said.
"With the railway out of operation, coal exports have ceased and inventory at the mine loadout facility has reached full capacity," Drummond said.
"As such, Drummond, for an indefinite period of time, will be significantly reducing its operations in Colombia," the statement said.
Colombian coal buyers in Europe said they had been told by suppliers that Drummond is putting its mine workforce on paid leave until the strike ends because the company has mined and moved to port whatever it can.
Although up to 4 million tonnes of exports have likely been lost from this year's shipments as a result of the strikes, and sentiment has become cautiously optimistic of firmer prices in Q4, the physical lack of tonnes from Colombia has yet to be felt, utilities and traders said.
"Europe has been oversupplied but I doubt there's been 4 million tonnes too much and the stockpiles in ARA aren't a surplus so I think you will see an impact, but later in the year," one end-user said.
"Yet when we offer Colombian, nobody wants it," a European trader said.
Fenoco is calling workers to vote on Monday on whether to lift the 19-day strike while Prodeco is challenging the legality of its mineworkers' action.
PRICES
A September loading South African cargo was bid at $87.00 and offered at $89.95, up 25 cents.
An October South African cargo was bid at $91.25, up around 25 cents while a November cargo was bid at $92.00. A September delivery DES ARA cargo was bid at $96.25, up $1.00 but with no offer against it.
An October DES ARA cargo was bid at $95.25 and offered at $96.50, down 25 cents on the bid.
COK Price at posting:
16.0¢ Sentiment: LT Buy Disclosure: Held
