By Jackie Cowhig
LONDON (Reuters) - Coal prices could spike higher on unexpecteddemand for 1-2 million tonnes of South African and Colombian materialfrom Poland, because of a railcar shortage cutting Russian supply,traders said on Wednesday.
Physical coal of every origin is likely to remain in extremelytight supply for the next 6-12 months, making lost Russian supply hardto replace.
Prices of around $200.00 a tonne CIF ARA are double what they weresix months ago despite steep falls recently due to speculator selling.
"Polish plants are looking at South African, at Colombian. Theyhave no choice, there will be very little Russian coal available. Theywill have to take what they can get," one Russian exporter said.
Polish utilities have been offered South African and Colombian coalfor Q3 and Q4 seaborne delivery at premiums of $15.00 a tonne above CIFARA prices, traders said.
Poland has imported more Russian coal by rail over the past threeyears because it has been cheaper for power plants there to use importsthan domestic coal.
But the acute shortage of Russian rail wagons has forced some ofthe larger Russian exporters to cut the tonnage offered to Poland thisyear.
"We have told them, we can't really help you this year. It's not aquestion of price," the Russian exporter said. Other Russian coalexporters said that they, too, have chosen to focus on other markets.
"It's not just Poland, it's other Eastern European countries too.We have to choose carefully which directions we send the wagons that wehave. So we're not able to offer to tenders in Romania among otherplaces," another Russian exporter said.
A Romanian tender in June seeking 480,000 tonnes of coal usuallyattracts competitive offers from Russian suppliers but this year therewere no offers, exporters said.
NOT RUSHING
Poland imported 5.9 million tonnes of Russian coal in 2007, theFinance Ministry said. Import needs this year are closer to 7 milliontonnes, traders said.
In January-May Russian imports totalled 3.6 million tonnes, the Finance Ministry said.
If half of the expected H2 Russian coal imports of around 3.5million tonnes are cancelled, that implies a need for over 1 milliontonnes of imports from South Africa and Colombia, traders said.
"We don't know how much more coal Poland is going to need, we justknow they're unlikely to get any Russian in Q4 and good luck findingthat much South African or Colombian," one trader said.
Polish utilities are enquiring for coal but are not rushing to buy alternative origins to Russian yet, traders said.
"They're waiting for prices to stabilise, hoping for lower pricesand they're not sure how much they'll get from the Polish mines or fromRussia. They'll probably be able to make some decisions by September,"another trader said.
Some Russian coal will continue to move to Poland this year,traders and Russian exporters said, but a smaller quantity than 2007'snearly 6 million tonnes.
"There is a rail advantage to some Russian suppliers," one tradersaid. "To go to Poland they don't have to send rail wagons through theUkraine, they can go direct to the border or through Belarus instead,"he said.
Russian rail monopoly RzHD has banned the transit of Russian railwagons through Ukraine from September 1 because thousands of wagonshave been retained by the Ukrainians, exporters said last month.
Poland was a key exporter of high quality steam coal to theEuropean market as recently as 2005. Exports fell from around 12million tonnes in 2005 to a few million tonnes this year of steam andcoking coal.
Polish coal and lignite production has been around 90 million tonnes for the past two years, almost all consumed domestically.