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RBCT coal stocks rise as Indian demand falls away

09 Sep 2013 15:48:52 | csd

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Coal in stock at the South African Richards Bay Coal Terminal was piled to its highest end-of-month total since September 2011, reflecting the pressure on Asian buyers, latest data out Monday shows.

Coal exported to southern Asia, mainly India, during August slid 50% to 1.38m tonnes from a month earlier. The Indian rupee has depreciated rapidly recently, pricing Indian buyers out of markets such as FOB Richards Bay (RB).

Coal shipped to east Asia, including China, was more stable at 1.89m tonnes, 4% below the amount shipped to that region in July.

“That doesn’t surprise me,” said one Europe-based swaps trader on Monday. “RB is an Asian story, and the figures point to weak Asian demand.”

Overall, 5.2m tonnes was shipped from South Africa’s main terminal for exporting thermal coal, down from 6.16m tonnes a month earlier.

The FOB RB swaps and physical markets remain under pressure. Indian buyers will find it hard to buy cargoes while the rupee remains weak. Chinese domestic coal prices mean buyers from that country are increasingly turning away from the international seaborne market.

At the same time, South African producers appear unwilling to drop prices much below current levels. Liquidity at the physical FOB RB market remains thin as a result.

One Swiss trading house has several capesized vessels lined up to float coal to Europe, despite current price and freight spreads that make it appear at face value as uneconomic.

Sources said they were sending the coal to Europe on the expectation some utilities will be missing cargoes because of the strike in Colombia at producer Drummond’s mines.

The company also has an offtake agreement and so needs to send the coal somewhere.

The strike in Colombia looks like it is coming to an end, which could also pressure South African prices. Sintramienergetica, the main union behind the strike, said over 2,500 votes were cast in favour of ending the action, with 55 against. However, the strike is yet to be officially called off. Fionn O’Raghallaigh

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