London - Prompt physical coal prices fell by $1 a tonne on Friday amid a flurry of fourth quarter trades.
Four December loading South African cargoes traded at $83.75 a tonne FOB Richards Bay, $2.50 lower than the previous day’s traded level.
There is a substantial amount of fourth quarter South African coal in the hands of traders which they are now offering and this is helping to weaken prices, traders and utilities said.
The sellers of the four December cargoes were all different companies but one buyer took at least three, they said.
“There was a bid at $79.50 a tonne for November South African and that doesn’t look like a ridiculous number,” one trader said.
Both India and China, the two biggest spot buyers of thermal coal, remain sidelined, and this will further weigh on prices, they said.
India’s imports of coal in general and South African in particular have been strong all year despite the current lull in spot buying.
India took 1.7 million tonnes of South African coal in September, down from 1.6 million in August.
Asia as a whole, including India, accounted for 63% of South Africa’s September coal exports while the Atlantic’s share fell sharply.
“Thermal coal markets should continue their lackluster performance for the remainder of 2012 and into 2013,” Credit Suisse said in a commodity price forecast research note on Friday.
“We expect further supply cuts and project deferrals/cancellations to emerge over the coming months. The speed at which these play out will be a key determinant in the length of time it takes the thermal market to reach a more balanced state,” it said.