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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/10/2000 
08:57 AM ---------------------------


Jez Peters
10/08/2000 07:51 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, Harry Papadopoulos/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
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
cc:  
Subject: ARA Coal Mkt Summary

MKT SUMMARY

Despite the fact that we have seen some cargoes offered for resale in ARA mkt 
for nearby delivery thru to Q1 this week the tone of the mkt 
remains very firm. EDFT, seemingly still unsure of it's burn schedule one 
week to the next had a spot cape to find a home for if he could replace 
with tonnage from either ourselves or the mkt for December delivery. We 
offered equivalent of $39 cif ARA but they chose to take her themselves 
and two port her into Le Havre and Montoir which shud highlight the inability 
to extract from the mkt anything better than $40.50-$41 cif for delivery
December period. Indeed, due to rescheduling Anker Coal were offering some 
South African material into ARA for Nov shipment which we
showed some interest in but they claim to have unloaded it at $40.75 on a cif 
basis. Thus the direction and structure of the ARA mkt continues
to reflect what we are seeing in both the FOB origin and frt mkts - there is 
no incremental tonnage available out of Australia for Europe as producers 
look to take advantage of a soaring Pacific prices. Many were already well 
sold as the mkt really took off and hence are actively trying to fulfill old
European contracts from elsewhere in order to free up some bullets. Certain 
South African producers claim to be sold out until the New Year and
Drummond continues to struggle with getting their shipment schedule back on 
track stating that it won't be until May next year that they are fully 
back on track again. While there is not a huge amount of open demand thru to 
the end of the year anyone who finds themselves entering the 
spot mkt from here on in will have to dig deep into their wallets. Q1 01 
still proves to be a very interesting period where on the supply side 
we will still be experiencing all of the above mkt factors but where there is 
also still a substantial amount of open demand to be satisfied. Still
could see some fireworks and a steeper inverse than what we see today with Q1 
01 at $41.50 fob and Jan/Dec 01 at $41.25 - watch this space.

SPOT TRADES     

While we have worked towards procuring some spot tonnage thru various 
channels it has been a week without any spot business. As per
above the mkt is fairly well covered for nearby tonnage and sentiment of the 
buyers is to remain very hand to mouth for final requirements
rather than pay these high prices in advance. We are also not too aggressive 
at mkting what material we have unsold in stock or arriving
later in the year as we are confident that the mkt will give us handsome 
returns as we move further into the winter months and those spot
buyers are eventually forced to the table.

SELLING SIDE

Mission still have not covered their December requirements. Our offer of 1.46 
GBP per GJ delivered Ferrybridge and 1.28 GBP FOR 
Hunterston were only valid until Friday but they claim to hold on offer of 
1.30 delivered Ferrybridge for Polish material. We said that
he shud be filling his face at that level and if we could have some aswell 
that wud be very kind. The sage continues!
We have agreed in principle to a five year supply agreement with Stadtwerke 
Bremen for between 850mmt - 1mil tonnes per year
starting Jan 01. Prices will be linked to the BAW Index.
HEW/VW combined are tendering for 270,000mt for Q2 shipment into Hamburg. We 
have offered $42.50 cif.
Electrabel looking for 50mmt each month 2001. 
EDFT continue to look for some cover for Q1 01.
Veag - 300mmt cif Rostock for Nov00/Jun 01
Endesa - 4 capes for 2001.
H del C was interested in spot cargo we were looking at and still working 
various possibilities of swapping material for 2001.
While we hoped Coe Clerici may be suitable counterparty to sell us Russian 
coal going forward they are looking for us to sell them
some sort of structure which will limit their Russian short going forward!
Fenosa - 250mmt of Low Vol U.S material for 2001 but so far unable to get an 
offer basis this material.
Innogy looking for upto 1mil tonnes for delivery throughout 2001
Bewag still have tender out for 500mmt for next year where we are looking to 
put a proposal to them basis Polish material.


BUYING SIDE

Continue to work Emerald for material out of the U.S. - hopefully persistence 
will pay and we may close something this week for 2001 
shipments.
Bot a further cargo from Masefield for Q1 shipment FOB Santa Marta at $32 
basis 11800btu/lb
Ensham had a lower quality coal (cape quantity) on offer at $25.30 fob Oz but 
unfortunately the specs make it a much more difficult prospect
to find a home for.
Possibility of buying some bits and pieces ex Maputo for Q1 which would 
equate to somewhere in the region $41 cif ara. Would be good
to test viability of shipping thru this port.
In tandem with 5 year agreement to supply Bremen with coal we have agreed a 
five year Agency Agreement with German counterparty
whereby he will procure Polish coal for Enron for shipment against our Bremen 
obligations.
NCSC - looking at feasibility of swapping or buying outright South African 
material for 2001.


EOL

What started as a fairly quiet week ended as our best and most exciting week 
yet. Between Thursday and Friday we did 16 trades via
EOL equating to just over 300,000mt. Glencore was the main sponsor of the 
action on Friday, intent on driving prices higher they were
a net buyer on the day and are no doubt testing our ability to act as a 
physical market maker and hence deliver against our commitments
with no coal assets as a backstop! Life to date we have traded 950,000mt on 
EOL so hopefully all going well we shud surpass the 1mil 
mark this week. 
We shud be in a posn where we can roll out our options against the SECA at 
Coaltrans in two weeks time.

GAMEPLAN

Running the risk of sounding repetitive our focus must remain on securing 
tonnage to play with for next year. To date our Drummond long has
been the only real ammunition we have and there is little security of supply 
out of Puerto Drummond for the first 6 months of next year. With the
demand that we have on the table today we could turn our 1 mill long into a 
short with no problem at all.  While there will always be a level
where one is happy to short a market I wud feel very uncomfortable doing so 
at the traded levels for 01 today despite the absolute levels 
being the upper end of the historic range. We still have a little way to go 
to actually signing contracts which secures us the 5 year deal 
with stadtwerke Bremen but  on the assumption we do we must start looking at 
our supply strategy for the first 6 months of next year where
it looks to be most challenging. The business we will be fantastic for 
creating flows into Germany and ARA and with the guarantee that we
can supply 10% of the total volume as Petcoke it will certainly act as the 
springboard for launching us into this tightly controlled mktplace.

Best Regards
Jez