South African Non-Coking Coal: Prices stay low on bearish market outlook

South African thermal coal prices have remained relatively unmoved over the week in the face of bearish market fundamentals prevailing across the Asia-Pacific region, although Indian demand seems to be recovering gradually as the seasonal monsoon subsides.

South African thermal coal export activity has lately picked up, drawing down coal stocks at Richards Bay export terminal and creating short-term supply tightness of the common export grades, according to market sources.

Up until recently, the export outlook of seaborne thermal coal from South Africa has been utterly dismal, in large part due to subdued buying interest observed in the main export destination of India.

Nevertheless, India-based end-users are more inclined towards South African thermal coal as compared to Indonesian coal of similar heating value in order to take advantage of competitive pricing.

However, the Indian buyers still seem to tread carefully with utmost caution as monsoon rains are affecting dispatch of cargoes from ports along the western coast of India.

India’s full-scale seaborne buying interest will possibly resume in the month of September, as buyers are well stocked at the moment due to their active pre-monsoon restocking in Q2 2019.

Richards Bay discounts

Discounts from the financial 6,000 kcal/kg NAR market to export grades of physical coal have remained barely unchanged over the past few weeks, being heard around USD 7.50/MT for the 5,500 kcal/kg NAR grade.

Discount for the 4,800 NAR grade was assessed at USD 11/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 14.65/MT and USD 14.40/MT respectively.

PRICE ASSESSMENTS

RB1 (6,000 kcal/kg NAR) coal is assessed at around USD 59.60/MT FOB Richards Bay.
RB2 (5,500 kcal/kg NAR) coal is assessed at around USD 48.63/MT FOB Richards Bay.
RB3 (4,800 kcal/kg NAR) coal is assessed at around USD 39.64/MT FOB Richards Bay.

For Indian buyers, the above offers amount to USD 74.13, 63.15 and 54.17/MT respectively, considering an average freight rate of USD 14.53/MT for delivery by Panamax vessel class.