At least four
capesize cargoes of South African coal have been sold back to the
original sellers by Chinese buyers during the past month and all are
coming to Europe, said sources familiar with the deals.
South African coal
is being stockpiled in Amsterdam-Rotterdam-Antwerp and at power plants
either for sale into Europe or to be burned at the main buyer’s own
power plants.
This comes at a
time when Australian coal is for the first time in years being offered
on the European market and will increase the downward pressure on DES
ARA prices, which have been resilient at $125-$130 a tonne this year,
traders and utilities said.
“We’ve been buying
South African coal at prices equivalent to flat to the API2 index,”
said one source who has bought back South African cargoes intended for
China.
“We haven’t bought
back any South African from China ourselves because we’ve only done
spot deals there but I am aware that this reselling is going on and it
is coming to Europe,” another Europe-based trader active in the Asian
market said.
It comes as no
surprise to the coal market that China is re-selling coal previously
bought as term deals but what is interesting now is that this coal is
headed for Europe rather than being absorbed in Asia, the sources said.
Chinese coal prices
have been below international levels for several months, making
domestic coal the preferred option and prompting re-selling .
China’s state
planning agency earlier this month called on regions and enterprises to
adopt effective measures to keep coal prices stable .
A large trading
utility last year signed a multi-year deal with several Chinese
utilities and buying agents to supply a mix of mostly South African and
some other origins to China.
A few other traders
followed suit with smaller scale term deals and it is these term deals
which are being unwound, the sources said.
“There’s more South
African and who knows what else being re-sold by the Chinese on an FOB
[Free On Board] basis and we don’t know where that’s going once it’s
loaded at Richards Bay if we haven’t bought it,” another utility source
said.
