Some buyers of Indian coal are looking to resell previously booked South African off-specification cargoes given the surge in global prices, sources said.
One Capesize cargo of NAR 5,500 kcal/kg coal that was due to arrive in India has been diverted to Turkey, one source said.
Buyers in Europe and the Mediterranean, and traders supplying the region, have been increasingly looking at South African coal, particularly higher calorific-value grades, as an alternative to Russian supply amid force majeure declarations from suppliers. These stem from railing problems, although heightened risk associated with bringing in Russian product amid sanctions and sterner rhetoric from European governments is also deterring business.
"Indian, Pakistani and UAE demand for South African coal is totally gone," according to one trader, who said nobody in these markets can buy at current prices.
"[Indian buyers] cannot afford to pay what they bought," said a broker, who added that Indonesian, Australian and South African coal is all flowing into Europe.
Danish utility Orsted said it will switch to procuring South African product.
The focus of northwest European buyers is on the NAR 6,000 kcal/kg grade, but some lower calorific-value product may also flow into the region.
NAR 5,700 kcal/kg April-loading coal was bid at a $40/t premium to API 4 on a fob Richards Bay basis today, sources said. But counterparties appear more willing to transact on a fixed-price basis at present, owing to significant volatility in the paper market.
In the paper market, API 4 April was valued at around $414/t in early afternoon London time, up by more than $100/t from the 1 March settlement of $298.75/t. Supply at the Richards Bay Coal Terminal remains very tight at just 2mn t, down by 100,000t on the week.
Another upshot from the spiralling international prices is that for certain markets, such as India and Pakistan, there is likely to be a continued preference towards domestically produced coal. This is typically of a lower calorific value but much cheaper than imported product at current price points.
