* European winter chill spurs buying
* Chinese demand still supportive
By Rebekah Kebede
PERTH, Nov 30 (Reuters) - Australia’s thermal coal prices, a benchmark for Asia, rose back above $110 per tonne during the past week, boosted by increasing demand from Europe where a cold spell has increased buying.
Thermal coal on the globalCOAL Newcastle index for the week to date was $110.35 per tonne on Monday, up from $107.88 a week earlier and up more than $4 from $105.77 on Friday.
Trading on the globalCOAL platform was very active coming off the weekend, with FOB Newcastle for February 2011 trading at $110 and $111 per tonne late Monday, according to globalCOAL.
But prices are still shy of this year’s record price of$112.13 per tonne, the highest level since October 2008.
Extremely cold weather in Britain and parts of Europe was the main driver for coal prices globally, including Australia, market participants said.
“The only weak link (in the global coal market) was Europe and now we’re starting to see that firm up,” one trader in Singapore said.
Forecasters said the cold weather is set to intensify in Britain this week with stronger winds, severe frosts and more heavy snow. [ID:nLDE6AS1TO]
British gas prices rose on Monday as gas demand was forecast to be 25 percent higher than seasonal norms. [ID:nLDE6AS118]
Prompt delivered Europe and FOB Richards Bay South African coal prices rose to their highest levels this year at $116.50 and $106.50 a tonne respectively.[ID:nLDE6AS1WH]
Chinese thermal coal demand is expected to continue to be robust, both in the short-term and through next year, keeping prices firm.
Chinese demand for coal is expected to slow somewhat in 2011 after jumping 30 percent in 2010, but a Reuters poll showed that analysts still expect the world’s largest coal consumer will import a median of 92 million tonnes of coal.[ID:nTOE6AN05X]
An order by the Chinese State Council to resume power supplies to households last week, and is likely to bolster coal demand further. [ID:nTOE6AM04F]
Chinese coal producers have begun preliminary 2011 price negotiations with utilities, a development that coal markets outside of China will be closely watching.[ID:nTOE6AL018]
If Chinese domestic prices rise, global prices are also likely to rise, according to the trade source in Singapore.
Demand from other northern hemisphere Asian countries, such as Korea, looking to secure adequate supplies before winter has also helped keep prices high.
The market will keep its eye on European and Chinese weather to gauge if demand coal will be above normal levels. Continued icy weather in Britain and continental Europe could spell higher coal prices.
Coal traders will also be focusing on Chinese domestic price negotiations for cues on demand in the world’s largest coal consuming nation.
Reporting by Rebekah Kebede; Editing by Ed Lane