print this and i need a folder titled ARA Coal Summary
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/02/2000 
12:09 PM ---------------------------


Jez Peters
09/30/2000 09:41 AM
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, John 
Bowman/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Paul Mead/LON/ECT@ECT, Karolina Potter/LON/ECT@ECT, Meindert 
Witteveen/LON/ECT@ECT, Louis Redshaw/LON/ECT@ECT, Niamh Clarke/LON/ECT@ECT 
Subject: ARA Coal Mkt Summary

MKT SUMMARY

  Dust is settling after latest supply side incident to hit the market - 
namely the Drummond Force Majeure. What remains now is cif mkt
   which is in backwardisation for Q4 and Q1 01 versus the rest of 2001 but 
where stocks in Rotterdam are at near record highs at around
   2.5 million mt for the end of September. Indeed, utilities and traders 
alike have taken advantage of the weak spot mkt we experienced 
   during August and early September to buy up distressed parcels in ARA and 
play the cash / carry game. This has certainly paid
   dividends as any slack which was in the pipeline has certainly been 
swallowed due to a number of incidents which has restricted
   production/shipments from various geographies. While the whole curve has 
shifted north as a result of early buying interest for 2001
   the backwardisation in the frt curves coupled with above has seen Q4 and 
Q1 prices increase by some $4 over past 6 weeks to
   absolute values at $39 cif ARA - this represents a prm of between 
$0.75-$1.00 over Jan/Dec 01 run. Believe the front end will continue
   to remain tight due to supply squeeze we are feeling and high frt rates 
but going forward into next year we may see some price pressure
   from levels we are today as a consequence of lower frt rates, increase in 
prod'n, synfuel into Europe and weaker continental power prices 
   from the high levels they are today. Control of FOB origin prices through 
continued consolidation in the production side of the industry 
   could put ruin to this and hence we look for opportunities to spread our 
long FOB origin posn into as many geographies as possible. 

SPOT TRADES

Bot one pnmx of Caypa Steam coal from Masefield for December shipment FOB 
Santa Marta at $US 31 basis 11800btu.
Sold 70mmt of chinese material to EVN delivered stockpile for October and 
November delivery at what is the equivalent of $41 
fob barge Rotterdam basis 6000 kcal/kg
Switched 20mmt Australian Steam Coal Fob barge Rotterdam with Electrabel for 
20mmt of Colombian Steamcoal at agreed
differential.
Bot physical put option from TXU (still to be finalised) for Cape quantity 
for Q1 delivery with a $40 strike price basis Rotterdam
and $40.40 basis Hunterston at $0.75 cent premium with exercise date of 30th 
November.
Sold 2 x 15mmt SECA contracts to Glencore for December delivery at $40 Fob 
barge and $40.50 fob barge respectively.


SELLING SIDE

Mission continue to look for La Loma material for December delivery - now 
looking at 2 pnmx 1 into east coast and 1 into hunterston.
Bewag have tender out for 500mmt for 2001
Rheinbraun/Duisbourg combined looking for close to 250mmt Colombian material 
on delivered basis.
Working with Electrabel to offer them 50mmt a month for 2001
Veag looking for 300mmt cif Rostock for Nov 00/June 01.
EDFT after tonnage for Q4 and a cape a month Q101.
Endesa - 4 capes for 2001.
Fenosa - looking for 250mmt of low vol U.S material split across 2001.
HdelC entertaining swap of Russian material for U.S coal during 2001
Billiton looking for small parcel of Colombian material in ARA.


BUYING SIDE

Emerald - still looking to buy high Sulphur material from U.S to execute 
Preussen deal. 3 firm pnmx plus 3 options. 
Masefield - offered further pnmx cargo of 11800 material for Q1 delivery at 
$32 FOB Santa Marta.
BBC Trading - 10-15mmt Russian material ex-stockpile Sczcecin to supply our 
bewag commitments.
Putting final touches to purchasing South African Material FOB RBCT for 200. 
Likely to be a cape quantity for Q2 delivery.
AES - UK coal for Q4 and Q1 2001.
BHP - 1 June 2001 Cape.


EOL

We are just shy of reaching 500,000mt mark for total volume of tonnage traded 
via EOL with the activity that went on this week. There 
continues to be excellent interest from all sectors of the industry and we 
really need to focus on converting the increasing number
of guest user ID's we are giving out into actual transactions on the system - 
many are still afraid of the technology, many are still ignorant
of how they can utilise the system as a risk management tool and many simply  
don't have the authority - hence we continue to focus
on preaching the word to all and sundry!! Highlight this week was having 
Glencore trade on two occasions and not surprisingly they were 
propping the mkt up on the buy side. We are moving ahead with posting options 
on the SECA contract on EOL.

GAMEPLAN

Current mkt environment has generated healthy buying interest for 2001 and 
with the expectation that we will still see frt rates ease off for 2001
from the high levels today ($9.50 RBCT - ARA Cape) combined with a somewhat 
weaker tone in continental power prices for 01 we are fairly 
keen to hit some of this business at current price levels. We have benefited 
from the current price hike maintaining an overall long position 
but with the lions share of that long being placed in Drummond we must focus 
on securing physical commitments from Drummond for first half 01 
shipments in order to participate in any of this business with peace of mind. 
Hence we continue to look for opportunities to tie up tonnage from
other geographies such as South Africa, Australia, U.S and Russia that will 
allow us the flexibility which adds so much value to our book.

Have extended dlist this week - if you donot wish to receive then please let 
me know and likewise if you would like people
added.

Best Regards
Jez