Weekly Thermal Coal Market Highlights

While South African and Australian thermal coal offers moved up this week, elevated freight rates have kept key importers such as India and China at bay. However, an Indian importer's interest in 5100 NAR grade Australian coal hinted at a possible competition to low-CV South African and Indonesian coal in the upcoming days.

South African coal index moves up by $6/t

Towards the end of Feb'21, API4 index for Mar'21 hovered around $81/t. However, two days into Mar'21 and the index moved up to $88/t, while finally settling at $87.7 by Thursday. The reason cited by market participants were technical issues in the S. African rail line, Transnet, resulting in depleted stocks at RBCT port.

While Indian importers have moved to the sidelines amid higher freight rates, market participants are attributing this index surge to paper trading rather than the physical activity.

The discounts for RB2 are being assessed at $15/t and for RB3 are at $25/t. While the freights for capsize vessels are at $11-12/t, that for panamax vessels is around $17.518/t (both the coasts).

Australian 5500 NAR offers rise

No deals for 5500 NAR grade Australian coal were heard this week amid increased offers at $56-57/t (+$1-2/t w-o-w).

Market participants informed CoalMint that 5100 NAR Australian coal may emerge as a competitor to South African 4800 NAR ($48/t FoB RBCT) and Indonesian 4800 GAR ($61/t FoB Kalimantan) coal given its lower per CV cost. In fact, in a confirmed deal, a cape vessel of 5100 NAR grade coal has been booked by a cement manufacturer (for its captive power plant) at $59.8/t, CFR ($48/t, FoB) west coast for end-March laycan.

In case of the cement sector, manufacturers are opting for 6900 NAR U.S. grade coal amid lower per CV cost. A cement manufacturer in South India opted to book 6900 NAR grade U.S. coal at $100/t, CFR basis for April loading.

Indonesian coal demand retreats from China

Amid increased freight rates, Chinese and Indian buyers have taken a backseat to book Indonesian coal and are likely to remain so till mid-Mar'21 by when elevated freights are anticipated to subside.

Chinese buyers are opting for domestic coal which is now trending at around RMB 570/t ($88/t). China's domestic demand has moved up in Mar'21 against the previous month after economic activity picked up pace after the Chinese New Year holidays.

Indian buyers are also keen to book Indonesian coal as part of stocking up coal before the monsoons but are currently opting for domestic coal.

Indonesian 5500 GAR grade coal prices are currently hovering at $71-73/t FoB basis for supramax vessels loading in Apr'21.