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South African Coal Rises to Two-Year High on European Cold Snap

Prices for coal shipped from South Africa’s Richards Bay, the continent’s biggest export facility for the fuel, rose to the highest level in more than two years as falling temperatures boosted European demand.

Snow and frost have disrupted transportation across Europe, including airports and the Channel Tunnel. London was as cold as minus 3.4 degrees Celsius (26 degrees Fahrenheit) today, John Hammond, a forecast with the Met Office in Exeter, England, said by phone. The average minimum for this time of the year is 3 to 4 degrees Celsius, based on data from 1971 to 2000, he said.

“Europeans came back quite strongly,” Hayden Atkins, an analyst with Macquarie Group Ltd. in London, said by phone today. “The weather’s been freezing and coal has been quite competitive with gas.”

Export prices at Richards Bay Coal Terminal gained $3.80, or 3.7 percent, to an average $107.11 a metric ton in the week to Dec. 3, according to researcher IHS McCloskey. That’s the highest level since the week ended Oct. 10, 2008. Delivered prices to Europe jumped 8.2 percent, the most since April 30, to $117.53.

Production of the material by BHP Billiton Ltd., Rio Tinto Group, Macarthur Coal Ltd. and Whitehaven Coal Ltd. may miss forecasts because of rainfall in Australia, Goldman Sachs & Partners Australia Pty said in a report today. The country is the second-largest exporter after Indonesia of coal burned for power and ranks first when coal to make steel is included.

Imports Into Asia

Scarce supplies from Australia may force Asian buyers to turn to other sources of coal, including Richards Bay, that traditionally served European clients. Asia’s coal purchases from South Africa were 3.32 million tons in September, compared with European imports of more than 1 million tons, according to mjunction Services Ltd., a web-based trader.

Benchmark European coal derivatives headed for the highest close of 2010. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year rose $2.25, or 2 percent, to $114 a ton at 12:31 p.m. in London.

The data are drawn from information supplied by ICAP Plc, GFI Group Inc., Spectron Group Ltd., Credit Suisse Group AG, IHS McCloskey, Bloomberg and Tradition Financial Services.

McCloskey’s data are an average based on daily price assessments and a market survey.

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