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Indian buyers seeking thermal coal from South African

Coal News - Published on Tue, 13 Feb 2018

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Platts reported that Indian buyers have increasingly been seeking higher-CV thermal coal from South Africa recently as US material has become more expensive and Chinese buying has mopped up any available volumes from Indonesia.

A Europe-based trader of South African coal told S&P Global Platts that “Usually [Indian buyers] bought 4,800 kcal/kg NAR and 5,500 kcal/kg NAR coals, but now they are also buying 5,700 kcal/kg NAR.” The source added that US-origin North Appalachian coal coal had been priced out of the market after strong bids from India in recent months which meant it had priced out of the market.

NAPP coal had been heard offered around USD 80 to USD 83 per tonne FOB US East Coast, with dry bulk freight rates for a Panamax vessel heard at USD 30.20 per tonne on the US East Coast-East Coast India route.

This gives a theoretical net forward price of USD 110 per tonne delivered basis, while South African coal has a roughly equivalent net forward of USD 113 per tonne when adjusted for heating values.

The advantage of shorter sailing times and Capesize freight rather than Panamax effectively allows Indian buyers to import South African coal at a cheaper rate than US NAPP coal.

Indian buyers typically purchase South African coal with heating values ranging from 4,200-5,500 kcal/kg NAR, and sellers said inquiries for these specifications had also increased due to problems with dispatches of domestically produced coal in India.

A south India-based consumer said that “Domestic coal is high on ash and moisture, moreover the logistic cost is also high.”

A producer-trader of South African coal expected this firm demand from India to hold in the mid to long-term as it did not expect state-owned producer Coal India Limited to be able to meet its production targets, having missed its 2017 targets.

The other key import source for Indian buyers, Indonesia, was tight on availability due to rainfall limiting mining activity, and most available cargoes had been booked by Chinese buying ahead of the Lunar New Year.

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Posted By : Nanda Koijam on Tue, 13 Feb 2018
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