It is reported that South Korean state owned utility company Korea Midland Power has been offered around 14 million tonnes of bituminous and sub bituminous coal through 70 proposals for its tender seeking only 2.37 million tonnes.
A company source said “We are now planning a short list of the bidders, and we intend to wrap up the negotiations and finalize the results of the tender by the close of business tomorrow, adding that 30 to 40 suppliers including domestic trading houses and large regional producers, had submitted proposals into the tender that closed on Wednesday.”
Komipo was seeking two long-term contracts at a price to be fixed and renewed on an annual basis.
1. For 500,000 tonnes per year of coal with a minimum NAR of 5,600 kilocalories per kilogram is for April 2010 to March 2013. Suppliers were offering prices from USD 85 per tonne to USD 100 per tonne on a fob basis.
2. The second contract is for 560,000 tonnes per year with a minimum NAR of 4,800 kilocalories per kilogram from April 2010 to March 2013.
Offers were heard at between USD 69 per tonne to USD 94 per tonne on FOB basis.
The utility was also looking to buy two spot cargoes on a fixed price.
1. The first cargo is a 750,000 tonnes parcel with a minimum NAR of 5,600 kilocalories per kilogram delivering during this year H1. Offers were at USD 88 per tonne to USD 105 per tonne FOB.
2. The second spot requirement, totaling 560,000 tonnes with a minimum NAR of 4,800 kilocalories per kilogram for delivery from 16 March to June 2010, received offers ranging from USD 68 per tonne to USD 100 per tonne FOB.
The wide disparity in offers from suppliers was attributed to the highly volatile and uncertain coal market in recent weeks, the company source said, adding that some of the lower-priced offers were for product that was marginally off-spec. The source also declined to comment on the identity of the bidders, although he confirmed that the lowest priced cargoes were not from Australia or Indonesia.
Buyers in northeast Asia have recently been turning to alternative sources like South Africa and Colombia for coal, as cold winter temperatures are driving up demand amid tightening supply from traditional sellers.
(Source from Argus Media)
