Coal news and updates

Will Australia steam coal prices spurt augur well for SA?

December 23: After a long gap of nearly a year, spot prices of South African and Australian steam coal are once again being traded almost at a par and this is likely to bring some of the Indian consumers back to usage of the former, industry sources feel.

“The recent firmness in Australian steam coal prices may augur well for South Africa as it is expected that Indian consumer, who had switched to Australian coal, may once again revert to South Africa,” an official from a power generation company told ICMW.

Australian steam coal generally commanded higher prices compared to RB1 of South Africa till November 2013, but a trend reversal happened thereafter, which saw prices of South African coal being sold at a premium to Australian coal.

However, during the past few days, another round of trend reversal was seen with the continued softness in prices of South African coal and hardness in Australian coal, according to data available with ICMW.

According to data available with ICMW, the price of South African coal (6,000 Kcal/kg NAR) was down to $65.25 per ton FOB on December 22, 2014 while Australian steam coal (6,000 Kcal/kg GAR) was quoted at $65.60 per ton.

As on December 20, 2013 the price of Australian steam coal was quoted at $86.25 per ton while that of South African coal was quoted at $85.75 per ton.

The price of Australian steam coal was lower than that of South African coal last time in January 2014 when the former was at $81 per ton FOB and the latter at $81.50 per ton FOB as on January 28, according to the data.

In fact, the price of Australian steam coal remained lower than that of South African coal since then as demand for the former from China gradually softened while, on the other hand, South Africa was in a position to ship extra to India and other countries to compensate for the decline in its export to European countries

“With the softness in Australian coal prices, a number of Indian consumers had switched to South African coal despite higher freight from Australia. But since the last few days, prices of Australian steam coal have firmed up whereas South African coal prices have softened thereby entirely changing the concept,” an official from a power generation company based out of western India said.

Following chart provides details of price movement of South African and Australian steam coal from December 20, 2013 to December 22, 2014.