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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 11/13/2000 
10:06 AM ---------------------------


Jez Peters
11/13/2000 05:03 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, Shamim 
Ali/LON/ECT@ECT, Katrina Bensadon/LON/ECT@ECT, Jez Peters/LON/ECT@ECT, Kevin 
McGowan/Corp/Enron@ENRON, Tom Mcquade/HOU/ECT@ECT, Scott Pack/NA/Enron@Enron, 
Dan Edwards/NA/Enron@ENRON, 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, Gregor Baumerich/LON/ECT@ECT, 
Florian Neubauer/LON/ECT@ECT
cc:  
Subject: ARA Coal Mkt Summary

SUMMARY

The market has definitely come under pressure since the dizzy heights of of a 
fortnight ago where producers were still standing firmly 
behind $33 per metric on a FOB Richards Bay equivalent and claiming it was 
heading swiftly to $35. While there had been some nervous
short covering by utilities in the month prior to coaltrans which had  
fuelled the mkt somewhat the buyers have remained disciplined and
in general have refused to commit to these numbers. The lack of business at 
these numbers has definitely moved the mkt south and of
course mkt psychology with it. While producers are still playing lip service 
to abve numbers they are actively putting up offers which 
reflect levels of $31 FOB Richards Bay and wud trade down to $30.50. Several 
sources have confirmed in the last cuppla days that
negotiations between Kepco and South African producers for price fixing 2001 
tonnage fell apart which ultimately means there will be
an additional 3 million mt which the South Africans have to find a home for - 
destination Europe most likely. On the flip side Kepco will
be looking towards Indonesia and China to substitute this tonnage and this 
combined with rumours that Formosa Plastic will be looking
for some 3 million tonnes of additional material from China cud serve to 
tighten the Pacific mkt over the next months for first half 2001.
There is definitely an intent within the consuming community to make a stand 
against the cartel and there has been a lot of activity over 
last three weeks with business being booked out of the U.S, Indonesia and 
Australia at numbers close to what was achievable from
S.A. into Europe. This can only serve to strengthen our opportunities in this 
mktplace and indeed German utilities who have been held to 
ransom by similar minded producers in Poland are now exploring every end to 
do business with other suppliers - namely ourselves 
in order to avoid being captive to one supplier. Weglekoks incidentally are 
currently in the mkt buying Russian material to cover sales 
made against Polish to Bewag - we don't want to be short Polish in the near 
term!

Mkt now trading at $41.25 Fob barge ARA for Jan/Dec 2001and $42.15 level for 
the Jan/Mar 2001. We still see couple dollars on the
downside although the latest incident (guerrilla attack on rail line last 
week) has Gary Drummond threatening to cut production down
in Colombia by half for first few months of 2001 to make a point to the 
unions. We are still trying to ascertain how much this wud bull 
the mkt short-term but we wud certainly take the opportunity to sell any 
spike.

SPOT TRADES  

January pnmx FOB Santa Marta from Masefield at $33pmt basis 11800btu 
One Cape of Colombian to Scotts Power for March delivery to Hunterston at $41 
basis 6000kcal/kg
Sld the Prima Cape  Option which was bot a fortnight ago at $30.65 to NCSC 
for $33.25 FOB Tanjang Bara both basis 6400 kcal/kg.
Bot 25mmt Russian material CIF Stettin at $39.75 to put against our Bewag 
commitments
Sld 5mmt Colombian to BEC (Duisbourg) basis $42.5 FOB ARA 
Sld API 2 Index for 2001 for 15mmt a month to Innogy 
Sld API 2 Index for 2002 for 15mmt a month to Innogy


SELLING SIDE

One Cape Q1 of Generic South African to Anglo at $32.5 FOB RBCT basis 
6000kcal/kg
500mmt delivered Berlin for Bewag for 2001. Struggling to compete with 
Weglekoks offer out of Poland.
2 pnmx of South African CIF Brunsbuettel for Jan and April shipment at $41 to 
UMAR (trader) who took the direct biz.
7mmt each month Feb/Dec 2001 to Anneliese at $41.75 basis generic South 
African specs
40mmt FOB Barge of generic South African to Dusseldorf for Q2 at $42.50
One pnmx to AMCI of Colombian material taking back either South 
African/Australian/U.S coal next year at agreed frt spreads.
One pnmx of 1.4 Sulphur "U.S coal" $40 CIF Gijon to H Del C - deal done 
subject to quality.
One pnmx of 1% Sulphur "US coal" $40 CIF Rotterdam to GKE.


BUYING SIDE

Continue discussions with Masefield regarding supplies from Santa Marta for 
2001
Working a proposal with Krutrade which will give us access to some 
significant tonnage of Russian coal for 2001 forward.
Various projects within South Africa all of which emanate from the 
development and success of "Operation Springbok".


EOL Update

Total EOL trades for November stand at 1.95 million mt out of a running total 
of 3.67 million from it's inception. As the figures suggest 
there is increasing activity/liquidity in the market with the arrival of 
several new players in recent weeks - most notably AEP. Increased 
volume in EOL has also been mirrored by an increase in the volume of SECA's 
traded in the OTC market with more and  more utilities
who have upto now remained on the fringes deciding to join the party - RWE 
has been the latest SECA virgin to lose it's cherry closing
a deal with ourselves early last week on Q1 through TFS. We are now offering 
our products in Euros aswell the good old green back
much to the confusion of one or two of our clients! At current pace we shud 
have surpassed all our expectations by passing the 5 mill
mark by the end of the year.

GAMEPLAN 

We are currently long to the tune of 1.5 mil mt but this is essentially all 
through optionality at origin which runs through to 2004.
Strip these out and effectively we are running a short ARA position of some 
1.5 mill mt  weighted pretty evenly across Q2, Q3 and Q4
2001 backed by some implied longs at origin through options and firm tonnage 
out of both Richards Bay and Drummond. We are 
very comfortable with this as we hold enuff bullets at reasonable numbers to 
go after the term Cal 01 business while running a European
short pos'n which shud capture the weakness which we are anticipating in both 
the frt mkts and in the Atlantic coal mkt. Shud the the 
European mkt gain some momentum then we have own some slightly out of the 
money options which we wud utilise to execute any
physical shorts in ARA and to keep mkt capped. 

Best Regards
Jez