London — High prices for benchmark 6,000 kcal/kg NAR grade thermal coal out of Richards Bay has meant off-spec coals in South Africa remain priced out of many key markets like India; despite widening discounts, sources said Tuesday.
"Discounts are widening a lot because no one wants to buy (South African coal)," said a European trader.
A trade analyst said stocks at Richards Bay Coal Terminal (RBCT) currently sit at 5.16 million mt, up 32.6% from 3.89 million mt at the start of the month.
"High stocks at Richards Bay reflect the weak Indian demand," said another European trader, explaining when stocks hit 6 million mt, prices could react strongly as this is considered a very high level.
The trader said Indian buyers have been looking for very competitive prices from Australia, as Australian 5,500 kcal/kg NAR coal in Capesize and Baby Cape vessels has proven cheaper than South African coal of the same grade.
As a result of low demand, high-CV prices have come under downward pressure, but have resisted so far. Off-spec discounts, however, have widened. Currently the discount for 5,500 kcal/kg NAR coal sits at a discount between $12-$13/mt for prompt delivery, having been at a discount of $10/mt at the start of the month.
High-CV coals out of Richards Bay have been given support from FOB Newcastle prices, which have remained strong in recent months owing to ongoing tightness in Australia.
According to cFlow, S&P Global Platts vessel tracking software, four coal-laden vessels were sitting in the Richards Bay queue Tuesday, an increase of two ships from the start of the month, but low compared with the 17 vessels reported at the start of June.
A 50,000 mt September FOB Richards Bay 6,000 kcal/kg NAR cargo traded Tuesday at $99.50/mt, with an offer for a 75,000 mt 5,500 kcal/NAR September cargo offered at index minus $10/mt also.
S&P Global Platts assessed the FOB Richards Bay 5,500 kcal/kg NAR, 7-45 day price at $79.30/mt Monday, having been as high as $90.40/mt in early July.
