The demand for coal increased in the fourth quarter as utilities worked to replenish coal stockpiles depleted by the hot summer and Midwest flooding of 2011. Fourth-quarter-2011 coal loadings in North America were 2.5% higher than in the fourth quarter of 2010.
Although currently thermal coal stocks with China look relatively high, there is no mistaking the fact that independent power producers are already drawing on their existing inventory.
At the same time, available supply is relatively static. As destocking will have to come to an end sooner rather than later, expectations have arisen that China will enter the market soon.
While China's January import data has come out strong, the previous two months did not witness such strength.
So, it stands to reason to assume that imports will remain strong over the next two months to make up for the shortfall, runs the argument. Timing of China's return to the seaborne thermal coal market and a likely shift in domestic market sentiment and pricing will hinge on how quickly China can destock.
As for India, imports have been strengthening in the last two months. Import figures for January have come out stronger than expected. On an annualised basis, import volume would be well in excess of 80 million tonnes.
Continued demand in Emerging Markets is putting pressure on Coal prices and will do for the coming decade. said Shayne Heffernan Economist at Heffernan Capital Management.
Demand for commodities in 2012 will be supported by a through-the-year improvement in global growth, although we cannot rule out periods of volatility similar to those in 2011, Rio Tinto's chief economist, Vivek Tulpule said in Sydney today.
Strong results once again for the ICE Coal Futures portfolio as 110,158 lots - including 4,800 lots of options - are cleared in February
With January revised upwards to 135,974 lots to include options traded, February results represent a 19% decline on the previous month - itself the 2nd highest monthly volume in the portfolio's history
Interest in the Rotterdam hub supported February's sturdy volume, but was relatively weaker in the Newcastle contract, where volume dropped back to December levels
Price volatility remained muted in the Newcastle and Richards Bay prompt contracts, while Rotterdam experienced a near US$8 drop by mid-month, of which US$2 were recovered by month-end
Open interest increased in February as market participants build up their positions in the Rotterdam contract, closing the month at 129 million tonnes - a 5% increase on January