South African thermal coal prices have been falling as buying interest from key export markets — India and Pakistan — has remained subdued for the last several months, with most end-user buyers expecting further price corrections.
Indian seaborne demand has been weak owing to the country’s delayed monsoon season, and is likely to affect the overall shipment volumes for the South African thermal coal export market.
Traders in the South African export market are still awaiting the return of more Indian buyers following the country’s delayed monsoon retreat.
Meanwhile however, rising export volumes to Pakistan on the back of growing coal-fired generation is expected to keep near-term demand for South African coal healthy.
Notably, South African thermal coal exports to Pakistan were recorded at 810,678 million tonnes in August 2019, up 27% month-on-month, but down 9% year-on-year.
The ongoing drawdown of thermal coal prices in the global seaborne markets have already been exerting enormous pressure, in the midst of intensifying competition between multiple originating countries, particularly Australia.
Richards Bay discounts
Discounts for South African coal from the financial 6,000 kcal/kg NAR market to export grades of physical coal are heard at around USD 8.00/MT for the 5,500 kcal/kg NAR grade.
Discount for the 4,800 NAR grade is assessed at USD 12.00/MT.
Dry Bulk Freight Assessments
Panamax dry-bulk shipping freight rates from the Richards Bay Coal Terminal (RBCT) to the East and West Coasts of India are USD 14.70/MT and USD 14.30/MT respectively.
PRICE ASSESSMENTS
RB1 (6,000 kcal/kg NAR) coal is assessed at around USD 61.05/MT FOB Richards Bay.
RB2 (5,500 kcal/kg NAR) coal is assessed at around USD 49.55/MT FOB Richards Bay.
RB3 (4,800 kcal/kg NAR) coal is assessed at around USD 40.04/MT FOB Richards Bay.
For Indian buyers, the above offers amount to USD 75.55, 64.05 and 54.54/MT respectively, considering an average freight rate of USD 14.50/MT for delivery by Panamax vessel class.
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