Coal

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South African Coal Prices Advance to a Seven-Month High on Domestic Use
July 4 (Bloomberg) -- South African thermal coal prices rose to a seven-month high as the country, the world's fourth-largest exporter, used more of the fuel to run its power plants.

Johannesburg-based Eskom Holdings Ltd., the world's biggest coal buyer, said on June 30 it expected to consume a record 111.6 million metric tons coal in the year ending March 31, 2006. The state-owned company is expanding electricity supply to keep pace with South African economic growth, which accelerated to a four- year high of 3.7 percent in 2004. Eskom burned an estimated 105 million tons of coal in the 12 months ended Dec. 31, 2004.

Coal delivered within three months from Richards Bay increased 95 cents, or 1.9 percent, to $50.55 a ton last week, the highest since the week ended Nov. 27, the globalCOAL RB Index showed. The index is 29 percent lower than a year ago.

Shipments from Richards Bay fell last week for a second consecutive week, Oslo-based ship agents Barwil Agencies AS said in a July 1 report. Richards Bay was due to ship 11 percent less coal last week than in the preceding week, Barwil said. About 1.44 million tons was set to be loaded for export, compared with 1.62 million tons a week earlier.

Richards Bay is owned and used by BHP Billiton and Anglo American Plc, the world's two biggest mining companies, and Xstrata Plc. A May 2 derailment disrupted the movement of 1 million tons of coal, Deutsche Bank AG estimated in a June 17 report. South Africa ships about four-fifths of its thermal coal to Europe.

Shipping costs between Richards Bay and Rotterdam fell 1 percent to $10.70 a ton last week, the lowest since July 2003.

The globalCOAL NEWC Index for coal shipped from Newcastle, Australia, increased 7 cents to $51.99 a ton, the highest since the first week of May.

GlobalCOAL's indexes are compiled from firm bids and from offers and trades made on its online platform. Participants include BHP Billiton, Anglo American and Rio Tinto Group, the third-largest mining companies; Electricite de France, E.ON AG and RWE AG, Europe's largest utilities; and Electric Power Development Co., Japan's largest coal buyer.


To contact the reporter on this story:
Simon Casey in London [e-mail]

Last Updated: July 4, 2005 04:13 EDT

http://www.bloomberg.com/news/markets/energy.html