South African Non-Coking Coal: Offers Inch Up On Discount Reduction

South African thermal coal prices firmed slightly this week, with sellers narrowing discount levels on offer prices, coupled with improved availability; although the flurries of spot deals seen in recent weeks appear to have subsided.

In the South African export market, prices for the commonly exported grades were mainly driven by the financial 6,000 kcal/kg NAR market.

The country’s export coal market outlook still remains far from bullish in light of subdued buying interest observed in the main export destination of India, where demand has almost stagnated due to the onset of the monsoons.

The seasonal monsoon rains is affecting the dispatch of cargoes from ports along the western coast of India. Nevertheless, Indian power plants have sufficient coal stockpiles for about 15 days of consumption needs, according to sources.

Although at present the India-based buyers continue to tread carefully with the utmost caution, they are more inclined towards South African thermal coal as compared to Indonesian coal of similar heating value.

Meanwhile, supply for South African 4,800 kcal/kg NAR thermal coal has been tight after some railway maintenance for Richards Bay, and offers are not favorable.

South African Discounts

The discount for 5,500 kcal/kg NAR coal is assessed to be lower as compared to the last week, at around USD 7/MT from the financial 6,000 kcal/kg NAR grade.

Discount for the 4,800 NAR grade has also moved down to USD 11/MT.

Freight rates

Panamax freight rates from Richards Bay (RBCT) to the East and West Coasts of India are USD 15.05/MT and USD 14.80/MT respectively.

PRICE ASSESSMENTS

RB1 (6,000 kcal/kg NAR) coal is assessed at around USD 61.55/MT FOB Richards Bay.

RB2 (5,500 kcal/kg NAR) coal is assessed at around USD 53.81/MT FOB Richards Bay.

RB3 (4,800 kcal/kg NAR) coal is assessed at around USD 43.76/MT FOB Richards Bay.

For Indian buyers, the above offers amount to USD 74.55, 66.81 and 56.76/MT respectively, after charging an average freight rate of USD 13/MT for delivery by Panamax vessel class.