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Friday, 08 January 10
SA COAL PRICES TO SPIKE ON RESUMED INDIA BUYING


South African coal prices are set for another price surge to over $100 a ton FOB as Indian and Chinese buyers compete for limited prompt supply, producers and traders said.

Indian buyers have been waiting since October for South African prices to fall back to $50,00 and many are yet to buy substantial tonnages which they have committed to end-users for Q1 delivery, traders and producers said.

Contrary to Indian traders' expectations, South African prices rose steadily during November and surged in December and again in early January to around $90,00 a ton FOB Richards Bay.

"The Indians have totally missed the boat. We have nothing left for Q1 and not much for Q2 and we're not alone. We've done business into China already and have enquiries for one-million tons from one Chinese utility alone," one major South African producer said.

"India needs at least 1-1,5 million tons a month from South Africa and if you assume cautiously that they only need to buy half of that during Q1, they will struggle to find it from anywhere in the market," he added.

India took over 30% of South Africa's 62-million tons of exports in 2009 and needs a similar tonnage in 2010.

"We've definitely noticed a rush in calls from desperate-sounding Indian trading companies looking for February and March coal," one broker said.

"Some of them are starting to realise that the market is genuinely tight and prices are not going to go down. They need to make some decisions very quickly if they want South African coal," he said. To read more  Mining Weekly / Reuters



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