Reuters reported that prompt cargo prices for South African coal dipped by 30 to 50 US cents after a day of thin trading. 

Most of the market's focus was on FOB cargoes from South Africa or Australia, destined for the Asian market. There were fewer trades, bids or offers for cargoes delivered into Europe, which remains chronically oversupplied despite the severe winter. Demand in Asia, led by China and India, remains the most powerful market driving force.

In its Global Energy Weekly, Bank of America Merrill Lynch said that its outlook for Chinese coal demand remains positive this year although imports are likely to slow over the next few months.

BoAML said in its report that the Pacific coal market is a lot tighter than Europe, with stocks low in key consumers China, India and South Korea. It added that "In order to discourage South African coal from flowing into Europe, the weakness of API2 to API4 will likely extend along the curve as the oversupply in Europe could persist well into 2010."

Source: Reuters