From: jeffrey.shankman@enron.com
To: jennifer.fraser@enron.com
Date: 2001-02-12 12:57:00+00:00
Subject: Weekly Coal Report

please get on distribution and put on web site.   thanks.  Jeff
----- Forwarded by Jeffrey A Shankman/HOU/ECT on 02/12/2001 12:56 PM -----

	Jez Peters
	02/12/2001 12:12 PM
		 
		 To: Stuart Staley/LON/ECT@ECT, George McClellan/HOU/ECT@ECT, Mike 
McConnell/HOU/ECT@ECT, Jeffrey A Shankman/HOU/ECT@ECT, Peter 
Bradley/LON/ECT@ECT, Samuel Grossman/LON/ECT@ECT, Pierre Aury/LON/ECT@ECT, 
Chris Connelly/LON/ECT@ECT, Riaz Rizvi/LON/ECT@ECT, Manfred 
Ungethum/LON/ECT@ECT, Sven Becker/FRA/ECT@ECT, John Moran/LON/ECT@ECT, 
Cornelia Luptowitsch/LON/ECT@ECT, Scott Longmore/LON/ECT@ECT, Tiffany 
Cochran/LON/ECT@ECT, Elizabeth McCarthy/LON/ECT@ECT, Tom Kearney/LON/ECT@ECT, 
Stephen Pirozzi/LON/ECT@ECT, Dimitri Taylor/LON/ECT@ECT, Kenny 
Nicoll/LON/ECT@ECT, Lisa Kent/LON/ECT@ECT, Candace Parker/LON/ECT@ECT, Harry 
Papadopoulos/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul Mead/LON/ECT@ECT, 
Karolina Potter/LON/ECT@ECT, Meindert Witteveen/LON/ECT@ECT, Ulf 
Ek/LON/ECT@ECT, Louis Redshaw/LON/ECT@ECT, Niamh Clarke/LON/ECT@ECT, Ivan Van 
Niekerk/EU/Enron@Enron, Bruce Chu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Shamim 
Ali/LON/ECT@ECT, Carrie Southard/LON/ECT@ECT, Kevin McGowan/Corp/Enron@ENRON, 
Lenny Hochschild/NA/Enron@Enron, Katrina Bensadon/LON/ECT@ECT, Stephen 
Asplin/LON/ECT@ECT
		 cc: 
		 Subject: Weekly Coal Report


SUMMARY

ATLANTIC

Mixed signals coming from the market at present with Billiton approaching us 
to buy FOB stem at RBCT for a cargo each Q2/Q3 and were active for the first 
time in a while in the SECA market buying up 2nd half 2001 material. 
Meanwhile there remains to be South African resell tonnage coming our way - 
predominantly appearing by way of the Spanish utilities who continue to have 
excellent hydro levels and ourability to source South African Call Options on 
FOB RBCT level with strike of $32.50 seems to question the recent information 
that Billitonsold tonnage at $33.25 equivalent into European consumers for 
the rest of the year Furthermore for the first time this year we begin to see 
Colombian resell material appearing on the market both on a CIF and FOB basis 
- probably no coincidence that this comes at a time when some of the steam 
seems to have come off the U.S. spot market. Overall the tone seems to be 
firmer but with very few new fundamental inputs to fuel this but rather 
producer sentiment  After weeks of tentatively drifting south the SECA market 
traded up a dollar along the whole curve last week. This was really a 
consequence of a few looking to buy into a market void of sellers which was 
itself is directly a function of peoples unwillingness to further sponsor a 
market which has come down some $5 from it's high's. The spot market is now 
trading at $40.50 Fob barge Rotterdam, 2nd half of the year at $40.25 and 
then 2002 at $39.50.

PACIFIC

Despite the extensive coverage which the Far East seems to be attracting with 
regards to economic slowdowns/weakness the Pacificmarket continues to be 
tight. The JSM/Producers continue their annual negotiations, but expect to 
see few conclusions from these in theshort term as the JSM's continue to 
exercise all the options they have to keep the drip feed going and most have 
clauses in their contractswhich allow them to carry on shipping material 
despite any agreement until September time. Both KEPCO and Lafarge have come 
out with tenders for the delivery of coal for prompt shipment - it is 
definitely a sign of progress that we are being invited to bid but without 
any length with which to play with, going short in front of Glencore and Rio 
could be expensive - the plan will be to participate without winning the 
business. The Chinese Annual Coal Fair took place over the last cuppla weeks 
where contracts for 2001 are negotiated and various sectors lobbyfor their 
allocation on infrastructure. The major takeaway's from the meeting were that 
total production is estimated at 950 million mt for 2001with exports targeted 
at 63 million mt - up 5 million mt from last year. Despite increased export 
targets, the sentiment remains bullish with most producers asking between $29 
and $31 representing a $3/$4 increase versus 2000 prices. Strong domestic 
prices will limit any downside in the export market and while the government 
is keen to keep pushing exports there is a general  scepticism over the 
ability of the rail to move the projected tonnage. We have signed a 
Memorandum of Understanding with a producer based in Inner Mongolia (ZCIC)to 
market upto 1 million mt per year into the export market - all going well 
this will provide us with the necessary length to be able to target business 
in the region more aggressively.

GAMEPLAN

We continue to try and take advantage of this mismatch between the origin 
markets and the European market by selling out of origin lengthand using the 
resell market to pick up tonnage to service our commitments at destination. 
We are working several bits of long-term destinationbusiness in the Atlantic 
which if successful will serve as a melting pot for any length we have 
remaining in that basin and more. We will alsolook to sell into any further 
rally in the destination SECA mkt. Despite fundamentals in Asia pointing to a 
slowdown in demand the consolidation we are seeing in Australia will 
certainly prevent any collapse in prices and short-term expect prices to head 
higher than the $30 I wud call FOB Newcastle today. It will be very difficult 
for us to get any ammunition for the near-term but we are looking at various 
projects which will again give us access to coal further out in the curve and 
at the same time are exploring any opportunity to own some optionality to 
give us some protection against a continued squeeze further out in the curve.

Best Regards
Jez