Traders and end users in India are seriously eyeing Colombia origin thermal coal, as a rally in prices in South Africa has made coal from there expensive.
South African original coal has been rallying in price for several weeks now. Currently, sellers of South African 5,500 kcal/kg NAR coal are feeling the pressure to increase their discounts from the benchmark grade 6,000 kcal/kg NAR coal.
The supply tightness for the 5,500 kcal/kg NAR grade would likely keep a lower limit on the discount rate, which had been seen to slightly widen so far this week, Platts reported.
While the Colombian coal will not be able to completely displace South African coal, it is being looked at as an irritant that could change into a strong competitor for marginal spot cargoes, particularly while Indian demand is weaker than in previous years.
Spot purchasing from India has been relatively limited so far this year as buyers initially withheld from purchasing at high prices, and were later looking to find a floor as prices fell during the last several weeks.
Several of the country’s largest buyers were also experiencing credit issues, which further prevented any spot purchasing.