South African Thermal Coal Prices remain under Pressure amid Weather Disruptions

South Africa is currently dealing with adverse climate conditions thus negatively impacting the thermal coal prices. The country has received heavy rainfall since Dec'19 resulting in flooding of the coal mines. The situation is made worse by the fact that the de-watering process is expensive in the country and many coal miners do not have money to undertake this mammoth exercise. As per the market sources, the supply situation in South Africa is likely to remain tight in the coming next few weeks.

Adding to this, another case of concern in the market is the recent spread of Wuhan coronavirus in China that has dampened the global market sentiments in the metals and mining sector. As per the market sources, if the situation does not improve over next few weeks, then it may cause heavy demand-supply destruction in the market.

At present the discounts for Rb2 grade (5500 NAR kcal/kg) South African coal are being heard to be in the range of USD 9-11/MT whereas the discounts for Rb3 grade (4800 NAR kacl/kg) are in the range of USD 15-18/MT for February loading.

Price Assessments

RB1 (6,000 kcal/kg NAR) coal is assessed at around USD 88-89MT FOB Richards Bay.

RB2 (5,500 kcal/kg NAR) coal is assessed at around USD 67-69/MT FOB Richards Bay.

RB3 (4,800 kcal/kg NAR) coal is assessed at around USD 54-57/MT FOB Richards Bay.

Panamax dry-bulk shipping freight rates from the Richards Bay Coal Terminal (RBCT) to India are in the range of USD 14 to 14.5/MT whereas that of capsize it is in the range of USD 11-11.5/MT.

In case of domestic market, the Rb2 grade thermal coal is being sold at around INR 6,050/MT whereas Rb3 grade is being sold in the range of INR 5,100 - 5,400/MT (ex-Gangavaram) port.