South African Coal Offers Trending High amid Weak Demand

India’s demand for South African grade has limited now. Sponge sector is buying conventionally in small quantities due to higher offers.

South African Coal index has shoot up again this week and assessed at USD 55/MT (6000 NAR), FoB Richards Bay for Jul’16 shipments. However, 5500 NAR CFR India offers remain unchanged at USD 53-54/MT for Jul’16 shipments.Indian buyers are still looking for discount of USD 5-5.25/MT on the given offers.

Particularly, India’s interest for South African grade seems to be falling regularly as the country is flooded with non-conventional suppliers from other regions with competitive offers.

[su_quote]An Indian trader quoted, “There are few enquiries heard in West Coast India for current loading with a discounted bid of USD 5-5.25/MT on offers as current prices are too high to take quick position in the market. However, still have moderate demand from Indian sponge sector.”[/su_quote]

Also added, they are offering about 50,000 MT South African RB2 (5500 NAR) coal at USD 54/MT, CFR Mangalore Port. The vessel is expected to reach in Jun’16 end at the port. Meanwhile, the same grade material in a capsize vessel is also being offered at USD 54/MT CFR Vizag, which is expected to reach till the end of Jul’16.

Another market participant highlighted that there are strong market speculations that prices will fall shortly as no major demand seems in the market on the given level.
In India, South African low CV 4800 NAR is available at USD 43-44/MT, CFR Kandla port for Jun’16 loading.

At present, ready to sell material of 5500 NAR coal is available at INR 4,500/MT at Magalore Port. Whilst, the same grade material is being offered at INR 4,400/MT (all duties and clearance included, taxes will be added further) at Krishnapatnam Port.

At West Coast India, low CV 4800 NAR coal stock & sale material is being offered at INR 3900/MT. While, high CV 6000 NAR is available at INR 5,000/MT at Kandla Port.

Vessel freight rates
Sea freight rates have gone up now a days. Also, freight for shipping coal in Panamax vessel from South Africa to India is assessed at USD 8-9/MT for East Coast ports.

Meanwhile, vessels freight rates are driven by increased crude oil market, which inched up to USD 50/barrel on Monday for the first time in 7 months. All size of bulk vessel freights are hovering in the range of USD 6-12/MT.