Indian traders said that coal prices achieved by Indian cement maker Gujarat Ambuja in its early November tender equate to USD 61.50 a tonne FOB Richards Bay, several dollars below the prevailing API4 physical index.

Traders supplying coal on a delivered basis to Indian end users at fixed prices have been squeezed by the recent rise in South African Richards Bay coal prices which is forcing them to supply at a significant loss. One Indian coal trader said that "Around half a million tonnes of cargo has been traded at least index minus USD 8.50 approximately.”

Traders have been buying South African coal at floating prices based on the API4 index to meet commitments made at fixed prices.

Indian cement makers such as Ambuja tend to prefer South African coal to lower quality, cheaper Indonesian material.

The rise in API4 to 12-month highs has left some facing losses of up to USD 10.00 a tonne.

Most of the Indian traders who will import nearly 20 million tonnes of South African coal in 2009 have not hedged their coal or their freight

Traders said that Gujarat Ambuja bought around 500,000 tonnes of South African coal in the first week of November at prices of USD 82 to USD 84.50 a tonne CIF India.

(Sourced from Reuters)