Physical prompt South African coal prices softened by $4 a tonne on Thursday after rallying on the previous day to the highest level since June.
September and October loading South African cargoes were bid at $87 and $89 a tonne on Thursday, down from trades at $91 and $92 on the previous day, while delivered Europe prices ended little changed. No fresh fixed price trades for DES or Richards Bay cargoes were reported.
South African and DES ARA delivered Europe prices rose in early trade but later fell in line with coal swaps, which were sold heavily.
Oil's gain on Thursday was largely ignored by the coal market. Oil futures were lifted by better than expected U.S. economic data, worries about potential Gulf of Mexico supply disruptions and lower forecast North Sea Brent production.
This week's coal price rise on the back of strikes in Colombia which have cut over 1.5 million tonnes from 2012's exports, was probably an overreaction given the market's continued, overall oversupply, traders and utilities said.
Workers on the Colombian Fenoco railway which moves coal to port for Drummond, Goldman Sachs and Glencore's Prodeco, plus Prodeco mineworkers, have been on strike for nearly two weeks. Buyers of Colombian coal say if the strike lasts for the rest of the month, it would take 4 million tonnes out of supply this year, which the country would not be able to make up.
This, plus supply cuts under way in the U.S., Australia, and Indonesia, will help rebalance the market and should push prices back above $100 a tonne again but at that level, fresh U.S. offers are likely to emerge, capping any price gains, they said. "The strikes are largely reflected in prices already and at $97 a tonne for ARA, some U.S. coal is starting to price in again already," one market source said.
PRICES A September loading South African cargo was bid at $87.00 and offered at $90.95, down $4.00 on the bid. An October cargo was bid at $89.00 and offered at $92.25, also down $4.00 on the bid. An October DES ARA cargo was bid at $97.00 and offered at $96.95 earlier in the day, little changed. A November DES ARA cargo was bid at $96.00 and offered at $97.00, also little changed