Coal prices drive Coal of Africa(CZA) higher

Coal of Africa (CZA) rose 8.5 % today to close at 112p, as South African coal prices continued to climb steeply on Indian demand. Though the CZA positons show a good profit (buy at 95p), continued upward pressure on Coal prices and news flow means that it continues to be a hold (Vele update, move from AIM to FTSE main market).

Reuters article:
LONDON, Jan 4 (Reuters) - Physical coal prices rose sharply by around $5.00 a tonne for cargoes delivered into Europe on strong buying after the New Year holidays.

South African FOB prices rose less steeply, by around $2.00 a tonne, on renewed Indian buying interest but are expected to move rapidly higher during the next few weeks because demand exceeds available supply, traders and utilities said.

Strong rises in oil and gas prices helped spur coal prices higher, traders said.

"It was the first day back after the holidays and everybody seems to have decided they ought to go out and buy now before prices rise any further," one European trader said.

Widespread, acute shortages of coal at Indian power plants are forcing state and privately-owned generators to cut power production.

Many generators have two days of coal stockpiles or less and port congestion is preventing the import of coal bought in Q4.

Indian traders who have contracted to supply coal to generators have not yet bought all the coal they need because they were waiting for prices to fall.

Several traders are rushing now to find February and March loading South African cargoes and are finding that the few available are rising in price every day.

"There was a February trade today at 88 U.S. cents over the API4 Index for a South African cargo but now you'd struggle to find anything for less than $1.00 over Index," another trader said.

Coal prices have risen sharply over the past two weeks and are set to strengthen further on tight supply and strong demand outside of Europe, traders and producers said.

TRADES
March delivery cargo of multi-origin coal traded via brokers at $88.25 a tonne DES ARA, up $3.00 from the last trade on Dec. 31. 50,000 tonne February loading cargo of South African coal traded on Monday at 88 cents over the API4 Index.

PRICES
March delivery coal cargo was bid at $88.50 and offered at $90.00 a tonne DES ARA on globalCOAL, up $5.00 from last Thursday.February loading South African coal cargo was bid at $82.00 and offered at $86.00 a tonne DES ARA, up $2.00 from last Thursday. A March loading cargo was bid at $83.75 and offered at $86.00, also up around $2.00.

Share tips - CAVEAT EMPTOR! (Buyers beware!)

When the Investors Chronicle Magazine arrived a few days ago  it was interesting to read the analysis of their Tips of the Year 2009. In a year which saw the FTSE All share grow by over 21%, the Investors Chronicle performed well below any fund which just involved putting your money in a straight tracker fund. Their top 20 Buy tips grew on average by 217% (including the assumption that Aero Inventory will no longer exist as a going concern) and their top 20 Sell tips declined by 56% on average. Therefore, you would have been broadly flat in you had invested in these 40 stocks tipped by the IC. The lesson is that magazines are a useful source of ideas and I get many this way, but investment decisions should be carefully researched before committing any funds. Remember, "tips are for waiters!"