An oversupply of thermal coal around the world this year could
see export prices out of South Africa's Richards Bay Coal Terminal fall below
$100/MT this year because of oversupply, Peter Major, a coal analyst with Cadiz
Corporate Solutions said on Wednesday.
“Australia and Indonesia are putting on more production and I think we
could see oversupply that could see the [thermal coal] export prices out of
Richards Bay Coal Terminal fall below $100/MT,” said Major at the just
concluded Mining Indaba in South Africa.
More than 7,000 delegates from around the world descended on Cape Town for
three days of deals, briefings and presentations, giving a sketch of where the
coal industry is heading this year.
The good news for coal producers, however, is that the
feared nationalization of Africa's biggest mining economy, South Africa,
appears to have been ruled out.
The bad news, however, is that the South African government
will consider new proposals by the ruling African National Congress for a tax
on the export of unbeneficiated minerals; a 50% capital gains tax on the sale
of mineral rights, to discourage speculators, and a possible windfall tax on
returns over 22%.
Separately, many analysts at the conference said that India
and China would both seek a great amount of thermal coal this year to feed
their growing numbers of coal-fired power stations.
The FOB Richards Bay market was seen supported by events in
Asia including heavy rains in the Hunter Valley in Australia. It last traded on
a fixed price basis on January and was assessed by Platts at $104/MT on
Thursday.
In Asia, higher ash Newcastle coal prices moved 75 cents higher Thursday to
around $94.75/MT FOB Newcastle as concerns resurfaced over the reliability of
some Chinese buyers, market sources said.
Participants said the fair value for Newcastle 5,500 kcal/kg
NAR higher ash cargoes for delivery within the next 7-45 day period was about
$95/MT FOB after the deal, and taking into account flat Chinese buying interest
at $92/MT FOB.
Source: Platts
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