South African coal market has witness a slight uptick in prices this week, overlooking the continuous fall in Indonesian mid and high CV coal prices.
Recovering from the past weeks’ correction, South African coal prices have gained an increment of USD 2/MT this week.
South African index for Sep’18 which had fallen to USD 98.8 in the previous week, rose to USD 101.75 in the current week before closing at USD 100.1, index for Oct’18 was assessed higher at USD 103.95 as on 14 Sep’18.
South African 5500 NAR coal was offered at a discount of USD 14-15/MT, assessed at UD 79-80/MT, FoB Richards Bay. While with a discount of USD 20/MT, 4800 NAR coal price was assessed at USD 63-64/MT on FoB basis.
Market participants have informed that the coal miners in Africa have certainly raised the discount on coal offers amid the rising index, but were ascertain on why the index had increased at the first place when Indonesian coal prices were falling.
An Indian trader while comparing the two coal markets commented that Indonesian low CV coal prices have found slight support from the return for Chinese buyers, but mid and high CV coal index continued its declining streak in the week; had no affect on the increase in South African coal prices.
Indonesian coal prices are, however, likely to move up in the coming weeks finding support from Indian buyers, which may further push the South African coal prices. Besides, Indian buyers would itself boost the purchase of South African coal as the uptick in coal demand from power sector would make domestic coal deficient for non-power sector, which would be seeking more imported coal of African origin.
Indian Market Scenario:
A trader at East coast informed that the Indian buyers were looking for South African coal shipments as they had to replenish their stock after the monsoon, but inadequate rake availability at port was hampering the coal movement from port to the plant location.
He added that coal delivery from Gangavaram port to Chhattisgarh, Jharkhand, and Odisha would take nearly 1.5-3 months based on the current availability of rakes. Hence buyers who seek coal from the stock and sale market at gangavaram were preferring coal from Paradip port even if it offers expensive coal than the former but saves considerable transient time.
South African 5500 NAR coal was quoted at INR 7200/MT (excluding GST and cess), offers for 4800 NAR coal was heard at INR 6100/MT in gangavaram port.
Coal offers in Paradip port stood INR 200/MT higher than that from gangavaram port, assessed at INR 7400/MT and INR 6300/MT, for 5500 NAR and 4800 NAR respectively.
Rake availability was comparatively better at VGCB (Vizag General Cargo Berth) in Vizag port, however with a waiting time of 15-20 days, buyers had to pay a demurrage of USD 2-4/MT. 5500 NAR coal was quoted at INR 7300/MT in the port.
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