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Coal falls with world markets, China quiet

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Mon Jul 23, 2012 12:49pm EDT

* Oct DES ARA trades $2/T lower at $89

* Aug S.African cargoes offered at $84-$84.50/T

* China Jun coal imports surge to record 22.53 mln T

LONDON, July 23 (Reuters) - Physical prompt coal prices softened slightly on Monday on weaker oil and macro anxieties, traders and utilities said.

"Coal is doing what it usually does when there are few, clear signals, it looks at macro factors such as China, euro zone crisis and oil," one European trader said.

Oil prices dropped 3 percent on Monday on fears that Spain is headed for a bailout and despite strong Chinese coal imports in June, China remains largely out of the spot market for thermal coal.

Stories of fresh Chinese forced price renegotiation are circulating in the market, dissuading some suppliers from chasing Chinese business at present because of what is perceived as a high level of performance risk.

China's coal imports surged by 65 percent in June, compared with year-ago levels, to 22.53 million tonnes, according to official customs data, but much of the surge was coking coal rather than thermal.

A few players who had been active buyers for the Chinese market are now selling prompt cargoes unwanted by China at a large discount to current prices, traders said.

A Chinese and a Singapore-based trade seller were on Monday each offering August loading South African cargoes at $84.00 and $84.50 a tonne FOB Richards Bay - $1-$2 a tonne below equivalent API4 swaps.

The lack of buying interest in these prompt cargoes (aside from the disssuasive element of counterparty risk) indicates that the Richards Bay market is coming under increased downward pressure from cooling Asian demand, suppliers said.

Few trades were reported - an October delivery ARA cargo traded at $89.00 a tonne, down $2.00 from Friday - because European spot demand has remained minimal despite strong coal consumption.

Utilities had already bought more coal than they will need but are likely to return to the spot market for limited Q4 tonnage.

TRADES An October DES ARA cargo traded at $89.00, down $2.00. (Reporting by Jacqueline Cowhig, editing by William Hardy)

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