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SA coal prices set to surge

South African coal “’
in great demand from
India and China
London, England — MININGREVIEW.COM — 08 January 2010 – South African coal prices are set for another price surge to over US$100 (R750) a tonne FOB, as Indian and Chinese buyers compete for limited prompt supply.

Reporting from here, Fin24.com quoted producers and traders as saying that Indian buyers have been waiting since October for South African prices to fall back to US$50.00, and many are yet to buy substantial tonnages which they have committed to end-users for first-quarter delivery.

Contrary to Indian traders’ expectations, South African prices rose steadily during November and surged in December and again in early January to around US$90.00 a tonne FOB Richards Bay.

“The Indians have totally missed the boat. We have nothing left for Q1 and not much for Q2, and we’re not alone. We’ve done business into China already and have enquiries for 1 million tonnes from one Chinese utility alone,” one major South African producer said.

“India needs at least 1 to 1.5 million tonnes a month from South Africa and if you assume cautiously that they only need to buy half of that during Q1, they will struggle to find it from anywhere in the market,” he added.

India took over 30 percent of South Africa’s 62 million tonnes of exports in 2009 and needs a similar tonnage in 2010.

“We’ve definitely noticed a rush in calls from desperate-sounding Indian trading companies looking for February and March coal,” one broker said.

“Some of them are starting to realise that the market is genuinely tight and prices are not going to go down. They need to make some decisions very quickly if they want South African coal,” he added.