Slow Trade Leant to Drive South African Coal Prices Down

South African coal prices have fallen about 9-10% since early Nov’16. Slow trade activities in the global market driving prices down.

South African coal offers have seen a sharp correction about USD 4-5/MT, FoB, compared to last week. Slow Chinese buying activities have hampered the coal prices harshly as all types of thermal coal index is going down on daily basis. Although, South African coal market is quiet volatile now, index API4 reached at USD 90.5/MT, FoB yesterday.

However, South African 6000 NAR coal is being offered at USD 80-81/MT, FoB Dec’16 loadings. While 5500 NAR and 4800 NAR coal is offering at USD 72/MT and 60/MT, FoB respectively.

Mentioned by an Indian importer, “Volatile South African coal index deters Indian buyers for bookings over risk. Persistently falling offers from peak left end users more optimistic, while waiting for price corrections further in near term.”

[su_pullquote align=”right”]One of India’s largest trading firm highlighted that “A month ago, miners and traders were holding their offers to make market stronger but it is not working out owing to sudden fall in global demand, also continuation at the same level is not possible. On the other side coal stock level at South African ports have also increased.”[/su_pullquote]

Also added on the current scenario, the market is lending from Artificial pricing to physical pricing but still on wait and watch mode.
South African, RB2 coal (5500 NAR) is being offered at USD 81-82/MT CFR East Coast India for Dec’16 loadings. Meanwhile, low GCV RB3 is being offered at USD 68/MT CFR Gangavaram Port for Dec’16 loading.

The bearish market outlook is constantly putting pressure on International miners and traders to cut their offers more. It is also expected that current market situation may influence Indian sellers to down coal stock prices further for coming weeks.

An East Coast based importer highlighted that “Stock and sale material of South African coal have fallen down at port, few traders, having small quantities are offering 5500 NAR coal at INR 6,700-6,800/MT CFR Gangavaram port (all duties and clearance included), and the offers can vary INR 100-200/MT port to port owing to demurrage and difference in port handling charges.”