Three South African thermal coal cargoes traded on Wednesday morning all at $87/MT, as the supply-demand balance for Richards Bay FOB coal is loosening sources said.
Two 50,000/MT South African coal parcels traded through the global COAL screen at $87/MT while a third 25,000/Mt shipments went through the same platform to some extent later in the morning.
Traders say that after the Richards Bay market has fallen so heavily for the last month or so, the market is currently covering short position which is driving levels back up.
Demand for South African coal is said to be coming mainly from India, after Chinese end-users — the other major buyers of South African coal — started defaulting and renegotiating cargoes earlier in the month.
While some sources say the monsoon season is not hampering any incremental demand in India, a shortage of coal stocks at power plants are maintaining Indian buyer's inquiries.
At the same time, the trader based in London- said that China “at a price is always there” so participants who have a short position in China are perhaps covering their falls now and purchasing cargoes. Richards Bay is super tight at the moment, finding a cargo to buy in July even at current high prices is almost impossible. Problem is on the supply side at the moment, more than on demand, as supply is not as strong as previously thought. He added.
There is definitely still demand from India, while Chinese stocks are still healthy, which, for him, would give players the opportunity to sell some South African coal to people who might pay a premium for it, particularly in the Mediterranean area. “Overall, the supply and demand picture is looser than it once was. “He said.
Source:Platts
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