RBCT prices slipping as buyers
seek cheaper alternatives
"Despite falling export prices, the Richard’s Bay spot market did not attracted much interest from Asian buyers during the month. Cheaper, lower quality Indonesian product remains a more attractive option to Richards Bay coal and lower freight rates from Colombia and USA continue to make Chinese delivered coal more competitive than South African coal. Indian demand for Richards Bay coal has been affected by the recent depreciation in the Rupee against the US Dollar. "
Driven by competitive Colombian and Indonesian prices and the expectation that prices may fall further, the Richards Bay FOB thermal coal price sank below US$100/t, hitting an 18 month low by the end of last week. Some traders expect the Richards Bay prices to fall to at least US$98.00/t before making a recovery. South African exports have not been pricing into Europe for the last four months which is further undermining export prices. Since January, the delivered price of coal at European ports has come in lower than the Richards Bay FOB spot price. A 50kt cargo of Phys ARA(DES) traded on globalCOAL at US$95.25/t for delivery in June 2012. The gap between Richards Bay FOB prices and the price at which European utilities are currently buying South African thermal coal continues to widen. Prices have been systematically weakened by high stockpiles at European ports which can be drawn down at relatively cheaper prices as well as competitive gas prices and favourable weather conditions in Europe.
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