South African thermal coal prices have continued on a downward trajectory throughout the year without any favorable uptick in buying interests from international markets.
Currently, the API 4 index for coal exported from South Africa’s Richards Bay terminal has further retreated to USD 77.40/MT, down 19.6% from USD 96.25/MT on 1 Jan’19.
Offers for the South African 5,500 kcal/kg NAR coal, mostly used by sponge manufacturers in India, have plunged by 34% from its highest-ever value of around USD 91/MT FOB Richards Bay on 9 Jul’18.
Nevertheless, South African coal prices are uncompetitive against most other countries of origin for the key markets of South and East Asia.
In India – South Africa’s biggest export destination – better price realizations from alternate foreign markets, viz. Australia and Indonesia, has been significantly lowering the appetite for South African coal among traders and end-users.
Consequently, South African non-coking coal shipments to India dropped by nearly 54% to 1.59 MnT on a month-to-month basis in the month of February from 3.45 MnT in January, as per the latest vessel lineup data compiled by CoalMint Research.
At present, US-origin thermal coal is increasingly being sought by the Indian buyers — especially because prolonged higher pricings of South African thermal coals had impacted import demand from South Asian countries like India and Pakistan.
Notably, Indian thermal coal imports from USA surged by a whopping 211.8% to 1.34 MnT in Feb’19, against 0.43 MnT in Jan’19.
PRICE ASSESSMENTS
RB1 (6,000 kcal/kg NAR) coal is assessed at around USD 76/MT fob Richards Bay South Africa.
RB2 (5,500 kcal/kg NAR) coal is assessed at around USD 60/MT fob Richards Bay South Africa.
RB3 (4,800 kcal/kg NAR) coal is assessed at around USD 47/MT fob Richards Bay South Africa.
For Indian buyers, the above offers amount to USD 89, 73 and 60/MT respectively, after charging an average freight rate of USD 13/MT for Panamax vessel class.
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