* Low freight rates help S.African coal flow to ARA
* Aug S.African hits lowest level since Feb 2010
LONDON, June 14 (Reuters) – South African prompt physical
coal prices traded at the lowest level since February 2010 on
Thursday, $81.65 a tonne FOB, as oversupply continued to weigh
on the market.
South African prompt cargoes are being sold into Europe for
the first time in months because freight rates are so low and
European buyers are seen as more reliable counterparties than
some who have recently defaulted or re-negotiated prices in
Asia, traders and utilities said.
Barely any South African coal has been shipped into Europe’s
main coal importing hub Amsterdam-Rotterdam-Antwerp for the past
several months because other origins were cheaper on a delivered
basis.
“Everyone in Europe can take South African to use it or
trade it but only when, for whatever reason, it prices in
competitively,” one utility source said.
DES ARA European delivered coal prices held steady for the
second day running at $82-85 a tonne on Thursday while prompt
South African FOB prices have held at similar levels.
Capesize freight rates between South Africa’s Richards Bay
and Amsterdam-Rotterdam-Antwerp are now just above $5.00 a tonne
– which does not even cover the cost of bunker fuel on the
voyage.
The “implied freight” (coal market parlance for the
differential between delivered and FOB prices which in theory
should reflect the freight cost) had become distorted earlier
this year, with FOB prices higher than delivered.
Continued…
