European coal prices react bullishly to Colombian strike
European coal swaps prices reacted bullishly on Friday morning to the news that workers for Colombia's biggest producer Cerrejon went on strike at 15:00 Bogota time on Thursday.
Sintracarbon, the union behind the strike, confirmed the action on its website. After a week-long vote, Sintracarbon said on 30 January that 97% of workers were in favour of downing tools in attempt to get better pay and benefits from the giant producer (see CSD 30 January 2013). Sintracarbon had until 9 February to strike, and, according to the union, further negotiations failed to come to satisfactory conclusion.
Cerrejon - a joint venture between global miners Anglo-American, BHP Billiton and Xstrata - slammed the reasons behind the strike as "unfounded and irresponsible".
Colombian supply has also been affected by the Colombian national licensing authority ANLA suspending US producer Drummond's licence to load coal at the port of Santa Marta until it takes corrective action for an incident that saw workers on a barge belonging to the company dumped coal into water to avoid it sinking in rough waters on 13 January (see CSD 7 February 2013).
Colombia was one of the few producers pricing into Atlantic basin market recently, but both the coal swaps CIF ARA and physical DES ARA markets have reacted over the last two days to the supply disruptions.
On Thursday, a trading source thought prices were getting close to levels needed to attract cargoes from Asia and elsewhere.
"I think you can expect in the short term for Europe to pull most of the coal from South Africa," said a coal analyst with a financial house.
CIF ARA coal swaps were bullish in Friday morning trade. March '13 was reported trading at $90.75/tonne at about 10:30 London time, which is $1.15/tonne above where ICIS assessed the contract on Thursday evening.
On South Africa's physical FOB RB market, brokerage globalCOAL reported an April cargo sold $86/tonne on Friday morning, $1/tonne higher than a deal for the same cargo on Thursday. Fionn O'Raghallaigh
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