South African coal index API-4 reached at USD 94.5/MT on 14 Sep’17, in response to the two days strike declared by Africa’s National Union of Mineworkers (NUM).
The strike activity will be carried out at the Exxaro Resources two mines namely-Grootegeluk and Leeuwpan and will involve around 1800 workers demanding pay-rise 0f 10% against the offered rate of 6.5% from Exxaro.
While most of the coal from Grootegeluk mine is supplied to domestic powerhouse Eskom’s power plants, coal from Leeuwpan mine is exported through Richards Bay Coal Terminal.
Although, officials from Exxaro resources have reportedly resumed wage negotiation with NUM to resolve the dispute, however the strike if continued could add fuel to the already strong South African coal prices, with the future price of API-4 for Oct’17 assessed at USD 96.85/MT yesterday.
South African coal prices are also supported by the rising Australian thermal prices as a result of strong buying from China. Australian Newcastle index which had crossed the 100 USD mark, is also pushing South African index prices towards the 100 USD mark.
Spot coal offers for 5500 NAR have reached USD 78/MT FoB Richards Bay this week, while that for 4800 NAR coal, it was assessed at USD 63-64/MT, FoB Richards Bay.
Indian Market Scenario:
Rising coal prices have deferred Indian buyers from taking cargoes, with current offers reported at USD 91/MT CFR India for 5000 NAR and USD 77/MT CFR India for 4800 NAR coal.
On the wake of high coal prices, Indian coal imports from the US could rise because of its increasing competiveness with South African coal.
The US 12500 Btu coal equivalent to 6400 NAR coal, was assessed at USD 58.7/MT according to US EIA’s weekly assessment, with panamax freight rate from the US to India being USD 30-31/MT, the coal amounts to USD 89.7/MT CFR India, which is still cost efficient than South African 5500 NAR coal.
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