South African thermal coal offers have been steadily declining in the latter half of this year — prices for all three grades (6000, 5500 and 4800 NAR) have significantly eased from their record highs attained in July.
South African 5,500 kcal/kg NAR coal, mostly used by sponge manufacturers in India, was assessed at its highest-ever value of around USD 91/MT FOB Richards Bay on 9 Jul’18. The price had since softened to around USD 60-62/MT as of this week.
Still, South African coal prices are uncompetitive against most other origins for the key markets of South and East Asia.
In India, South Africa’s biggest export destination, better price realizations from alternate foreign markets, viz. Australia and Indonesia, has lowered the appetite for South African coal among traders and buyers.
Consequently, Indian coal sourcing from South Africa had declined to a yearly low of 2 MnT during Oct’18, falling 38% M-o-M from 3.24 MnT in Sep’18, also down 34% Y-o-Y from Oct’17.
Meanwhile, China’s import curbs would divert more Indonesian and Australian coal toward the Indian market, which in turn might compel the South African coal exporters to offer higher discount levels in order to compete with cheaper alternative coals.
Source: CoalMint Research
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