TRADERS WAIT TO SEE RESULTS OF LABOR PACT

TRADERS WAIT TO SEE RESULTS OF LABOR PACT

One full week after ratification of a new five-year coal labor contract, it's still too early to tell what's going to happen in the market, veteran buyers and sellers say.

Part of the reason is that not many deals are being made while players on both supply and demand sides take a wait and see attitude, according to a wide range of industry sources.A top executive of one of the largest U.S. coal production and brokerage companies, who attended a recent coal trade conference in New Orleans, adamantly stated in private discussions that the price for U.S. steam and coking coal will increase this year in both domestic and international markets.

But the representative of one of the largest foreign buyers of U.S. coal, also attending the New Orleans conference, said $4-a-ton price increases being sought by coking coal suppliers in the United States, Australia and Canada are unrealistic.

He said a rollover on the 1987 price is more likely and that price decreases are a possibility, especially if buyers leave room for spot purchases later in the year.

A New York broker, who buys domestically and sells internationally, said he has seen a few instances of producers lowering their asking prices by 50 cents to $1 a ton.

An Appalachian producer remarked that he was surprised not to see much of a drop at all on domestic prices for steam coal of medium and lower quality. He added, however, that he was slightly unnerved after a conversation last week with a Big Sandy River supplier who said he had coal coming out of my ears.

The Appalachian producer said prices are up for coking coal. He reported that high volatile coal fetching $29.50 a ton at the mine three weeks ago was sold last week in an export transaction for $30.50.

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Southern Co. Services Inc. is adopting a new buying strategy for coal needed at Georgia Power Co. generating plants.

Southern Co. has notified companies on its regular list of suppliers it will accept open offers for one-month supply periods instead of its more typical three-month buys.

The company said the reason for its new program is to fine-tune (coal stockpile) inventory control.