Market overview from globalCoal for June 25

Coal markets started the week on a bearish note with both paper and physical values dropping in early trading. With continued unrest in the Eurozone the Euro remained weak losing 0.5% against the US$, whilst Brent and European gas and power markets fell. However, in afternoon trading we saw physical buying interest help buoy the prompt end of the curve. By close of play much of the early losses for the Q3 months had been regained although the Cal13 products remained weak. Front month Brent crude finished the day lower by ~$1.10/bbl to close at ~$89.90/bbl level.

Signs of tightness in the prompt Newcastle market continued as buyers increased their bids in the prompt, and index linked values tightened for the prompt and fourth quarter. The Indonesian supply and demand equation continues to be loose as an overhang of Indonesian tonnes (from low to high CV) is manifest - as producers continue to offer-on at lowest-done levels in anticipation of the third quarter being tough due to an absence of Indian and Chinese demand. The Indian rupee fell to a new historic low at the close of last week, which further dampens demand. There is a slow stream of Chinese buying enquiries for higher CV coal over the summer period, but bids are not aggressive and not higher than current market low levels.(*)