Demand for South African coal is garnering more attention from the buyers as prices have ease from record highs in Jul’18.
South African coal Index API-4 had risen to record high as a result of surging international coal prices, reaching USD 109 at one point. Consequently, such high levels had made South African coal uncompetitive against coal from other origins.
Recently, South Africa’s largest coal miner Exxaro had also highlighted the impact of the rising coal prices in its half yearly report.
The company’s total coal exports had increased 15% Y-o-Y to 3.921 MnT in H1 CY18 against 3.396 MnT coal in H1 CY17. However, exports had fell 7% from 4.216 MnT coal volume exported during the second half period of CY17, weighted down by the elevated price index which averaged USD 97 in H1 CY18.
Nevertheless, South African coal has gained preference again among the buyers due to the hefty correction in prices. Coal index API-4 has come down to USD 97.5 as on 31 Aug’18 for Sep’18 loading.
Market participants have informed that a built up of coal stock at RBCT has helped in bringing the prices down, besides the buyers have also been attracted by the widening discounts on coal.
At present, available discount for South African 5500 NAR was quoted at USD 13/MT, while for 4800 NAR coal discount was USD 18/MT. The declining coal prices in Indonesia had forced the coal miners to raise their discounts.
Subsequently, South African 5500 NAR coal was assessed at USD 77-78/MT, FoB Richards Bay. 4800 NAR coal was priced USD 63-64/MT on FoB basis.
As far as Indian prospective, the lower coal prices are likely to attract buyers as they prepare to restock coal after the monsoons. Moreover, the expected rise in power demand and fall in coal dispatch from CIL would add to the demand from non-power sector.
South African 5500 NAR coal was offered at USD 91-92/MT on CFR India.
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