November 20, 2008

RBCT FOB coal prices touch USD 100 mark

Plats reported that Richards Bay prices stunned the coal market with a series of trades around USD 100 per tonne FOB last week, as nervous buyers from Asia and southern Europe scrambled for available cargoes.

News that a lightning strike had knocked out the power supply to part of the Richards Bay rail line brought nervous buyers rushing to the Richards Bay market. One source in South Africa suggested the line may only operate at 50% of its capacity for the next two weeks and could shut down completely between Christmas and the New Year. The source said that "Richards Bay stocks could fall to 500,000 tones and then the market would go through the roof.” Stocks at Richards Bay usually hover around 3 million metric tonnes.

Market sources stated that rising demand for Richards Bay cargoes was coming from India, Japan, Korea, Pakistan and the Mediterranean and southern Europe. South African producers are believed to be largely sold out of coal and the few cargoes available are in the hands of trading companies.

A utility source said that "The Richards Bay price in the next four to six weeks will depend on the perceived situation in the Asian market. Any signs of a cooling down in the Pacific of people paying USD 90 per metric tonne FOB for Newcastle coal will be transmitted to Richards Bay prices."

Mr Mike Asefovitz a spokesman for Transnet which is responsible for the Richards Bay rail line confirmed that train deliveries to the coal terminal were experiencing delays. He added that "A sub station was hit by lightning. Trains are still running but there have been delays." But he downplayed reports that the line could be out of action for some time.