Johannesburg, South Africa — MININGREVIEW.COM — 23 September 2010 – South Africa coal prices are poised to reverse a four-month decline, and may rise to a two-year high as sales surge to India and China “’ the world’s fastest-growing major economies.
Bloomberg News reports that prices at Richards Bay may climb more than 12% to US$95 a metric tonne this winter, according to a survey of six traders and analysts in India “’ South Africa’s biggest customer for the fuel. Coal from the east coast port was at US$84.80 last week, and has averaged US$87.71 this year, according to IHS McCloskey data.
India’s thermal coal imports surged 16% in the year ended 31 March 2010 as the country’s near- double-digit growth boosted demand for electricity. China, which passed Japan as the world’s second-biggest economy in the three months to June, became a net importer of coal last year.
South African exporters are benefiting, with shipments to India rising 14% in the year to August and shipments to China jumping 10-fold.
“India will be importing in a big way and we expect a rise in demand from the Pacific area, which includes Japan, Korea and China,” said T.K. Chatterjee, procurement manager at NTPC Limited “’ Asia’s second-largest power producer. “This will lead to an increase in prices.”
South Africa accounts for about 30% of India’s thermal coal imports, according to coal ministry data. Shipments in the first eight months of this year increased to 13.3 million tonnes, while China’s purchases surged to 4.7 million tonnes, according to mjunction Services Limited, a Kolkata-based trader backed by Tata Steel Ltd. and Steel Authority of India Ltd., two of the country’s three biggest coking-coal consumers.
“We expect Richards Bay prices to pick up over the next few months as the monsoon season in India comes to an end and we see them return to the market,” said Amrita Sen, a London-based analyst at Barclays Capital. “Underlying Indian demand for coal remains extremely strong as India continues to industrialise, which is reflected in its rising power generation. Prices at Richards Bay may average US$90 a tonne this year and US$92 in 2011, she said.