Indian buying of South African coal has slowed considerably and is unlikely to pick up until September, when current high stocks have been consumed, Indian traders said. Almost all of South Africa's 65 million tonnes a year coal exports are sold into Europe.
India's emergence as an unexpectedly strong buyer this year, seeking to replace lost tonnage from China and Indonesia, pushed prices up from $47.00 FOB Richards Bay in January to last week's high of nearly $61.00.
"Prices are already falling. There was a trade today at less than $57.00. Nobody in India is buying, nobody in Europe wants to buy so the prices must fall further," one Indian trader said. On Monday a September loading South African coal panamax traded at $56.75 a tonne FOB on trading platform globalCOAL.
European spot coal demand has been extremely low this year and is expected to increase only slightly in the region's autumn, producers, traders and utilities said.
A sharp fall in Indian buying for even a few weeks would be likely to cause South African prices to fall, producers and traders said. "There is no demand from Indian traders because there is very little demand from end-users. In any case, traders are still selling stocks from cargoes brought in at much lower prices than current levels," the Indian trader said.
"There are full stocks at all the ports and these will take a couple of months to be used up. The big corporate buyers and the small consumers have got almost all that they need now and there is no need to buy," another Indian trader said. India and Pakistan have imported around 4 million tonnes of South African coal this year, almost all via Indian trading companies.
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