South African Thermal coal market is still following uptrend, strong FoB offers not seems viable for Indian sponge units.
Strong South African thermal coal offers are rigid to fluctuate since last couple of weeks and are holding lasts upside for further trades. Presently, South African 6000 NAR offers reached at USD 66-67/MT, FoB for Sep’16 shipments, recorded highest since Dec’14. Rising offers kept India buyers quite as prices have reached beyond their operational feasibility.
South African 5500 NAR sponge grade coal is offering at USD 62-63/MT, CFR East Coast ports. While, low CV 4800 NAR coal is being offered at USD 52/MT, CFR India.
Since there is sharp rise in South African coal offers, it not seems viable for sponge units which resulted into shift in buying interest from imported towards domestic coal. While, on the current scenario, traders and end-users both are hoping for market stability which will make feasibility on trade.
“India, which provides about 70% thermal coal export market to South Africa is now gradually shifting towards indigenous and other alternative coal sources. This is because, erratic and unreasonable price moves deterring Indian buyers to go for high priced coal although traders are hesitating to take position on risk.” commented by an Indian trader.
India have been importing at an average about 3.7 MnT coal from South Africa per month since Feb’16. Whilst, in Jul’16 monthly imports have fallen by 8.5% as compared to Jun’16. As per SteelMint analysis, it is also noted that import will go down more in Aug’16.
On the other side, owing to rising imported offers, Indian East Coast based traders are eying on profit margins and holding South African coal stock at ports as they are looking to sell material at higher prices which was purchased lower by USD 3-4/MT earlier.
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