Reuters reported that prompt physical coal prices rose by around 25 US cents to USD 1.00 a tonne but coal swaps rallied more strongly on oil's move above USD 112 a barrel and improved macro sentiment.

Oil held firm above USD 112 on Friday after plans for Spanish economic reform eased investor concerns over Europe's debt crisis. Improved sentiment lifted oil, base metals and gold in early trading on Friday, pulling coal up too.

No fresh trades were reported for delivered Europe or FOB Richards Bay cargoes and key buyers in India and China remain largely sidelined.

Despite unusually strong coal consumption in some European countries, oversupply will keep coal prices range bound and below USD 100 a tonne for many months, utilities and analysts said.

Coal physical prices hit a two year low of USD 81.65 a tonne FOB Richards Bay in June and have since moved into a new, slightly higher range which is unlikely to change in the near term.

Coal swaps reacted more strongly to the lift in other markets than physical coal prices, widening the discount of physical to paper to as much as USD 3.00 a tonne from around USD 2.00 a week ago.

Source - Thomson Reuters

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