South African Thermal coal prices hit the highest since Mar’13 as index crossed USD 100/MT for Nov-Dec’16 loading’s.
After hitting years of high, South African coal prices have again hit a fresh record and reached at 44 month (since Feb’14) high yesterday for Nov-Dec’16 loading’s. While, South African coal index (Nov’16 shipments) rose by about 4-5% in a single day and crossed the level of USD 100/MT, FOB yesterday.
Behind the constant price hike, there is no fundamental reason to justify the market spike. Perhaps Chinese domestic mining cuts which resulted in sudden rise of imports demand since May-Jun’16, have largely taking much of the market by surprise.
The current week offers of South African 5500 NAR (RB2) coal increases by USD 4-5/MT, FoB for Nov-Dec’16 shipments . After it witnessed a sharp growth in early Nov’16, currently RB2 is hovering at the range of USD 85-86/MT, FoB. Meanwhile low CV 4800 NAR is offered at USD 70-71/MT, FoB.
However, in India offers heard for 5500 NAR coal is at USD 94-95/MT, CFR at East Coast ports. While, low CV South African RB3 (4800 NAR) is available at USD 80/MT, CFR Gangavaram.
[su_pullquote align=”right”]One of the West Coast based trader highlighted, “In India buyer’s remained quiet towards price hike as the given cost is not feasible to operate. At the current situation offers are very high, only fewer buyers are interested. On the traders point of view, profit margin have been rising rapidly but sales of volume have fallen which may also a big concern.” [/su_pullquote]
Rising Coal Price Impact on Domestic Sponge Industry
In India, persistent rise in South African coal prices is squeezing profit margins of sponge makers which may turn to pass on the extra burden to the consumers in near-term. On the other side high cost raw material have already left its impact on end product which have been moving up since Sep’16. In the current week (Week 45), sponge prices have gained by about INR 600-800/MT W-o-W and by INR 200-300/MT on monthly basis.
Moreover, Traders and buyers both are remained wary of the present South African coal market now.
Stock and Sale Offers at Indian Ports
South African stock & sale offers at ports have risen again this week on the wake of current price hike.
A Panamax vessel of 5500 NAR coal is offering the Indian trader in stock and sale at INR 7,000-7,200/MT at West Coast Ports. Whereas, old material of RB2 at Vizag is available at INR 6,700/MT loaded on truck basis (all duties and clearance included, VAT & CST will be added further).
At Kandla port about 20,000 MT old material of 4800 NAR is being offered at INR 6,000/MT. Whilst at RB2 is available at about INR 6,600/MT at Mangalore port.
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