Newcastle’s January recovery from major price falls last year has not been echoed at South Africa’s Richards Bay Coal Terminal, with the globalCOAL RB index falling 1.91% to $US72.73/t in the week to January 23 and down 10.14% from $US80.94/t at the start of the month.
Talking to International Longwall News, Paterson Securities coal analyst Andrew Harrington noted the ARA index closed at $US70.56/t on January 23, lower than the Richards Bay price by over $2, saying it suggested a negative freight.
“The ARA is generally considered to be South African spot prices plus freight but when it is trading negative, it is highly unusual,” he said.
“My best estimate would be that you are seeing Richards Bay prices reflecting Asian prices rather than European prices.”
Harrington indicated Richards Bay coal could be making its way east to India and other parts of Asia rather than Europe.
While there is no index that covers coal prices out of Colombia, Harrington said the lower ARA price could reflect cheaper Latin American coal to South African coal.
He added the ending of the gas dispute between Russia and Ukraine could see a fall in some of the coal demand coming out of Europe.
Therefore the current discrepancy between Newcastle prices and South African prices could reflect a stronger Asian coal market compared to other markets, he said.
Contract prices for thermal coal were as high as $US125/t last year, before commodity price carnage fuelled by the ongoing global financial crisis.