LONDON: Physical coal prices fell by between 75 cents and $1.50 per tonne on Wednesday on tepid demand and growing offers for prompt shipment.
European delivered coal prices for Q4 fell below $90.00 a tonne on Wednesday with a trade for a November cargo at $89.50, down over a dollar.
"There are plenty of offers, more than there were recently but not much is trading," one European trader said.
More South African cargoes are arriving in Europe, some adding to stockpiles of mostly Colombian and US material in the Amsterdam-Rotterdam-Antwerp coal hub.
This is an unusual trend because the price of South African coal and cost of shipment should make taking it to Europe rather than Asia a loss-maker, but demand from Asia has been so weak that sellers lifting South African cargoes have shipped to Europe instead.
Prompt South African prices also remain under pressure because of weak demand from India and China and fell on Wednesday by $0.75-$1.50.
"China is the worst possible market of all, you will struggle even at bargain prices," said an Indian trader who regularly supplies the Chinese market.
The risk of non-performance by Chinese buyers, should prices fall sharply again or because Chinese traders are seen by some suppliers as financially vulnerable, is still discouraging some suppliers from striking fresh deals, despite the lack of buying interest elsewhere.
Unpaid bills are piling up at Chinese coal and industrial companies, pointing to an industry-wide shakeout that threatens to put smaller firms out of business.
"There are no signs of economic recovery. The government is reluctant to implement any stimulus measures. The situation will get worse by the end of this year and even worse by the middle of next year," said Helen Lau, senior analyst at UOB Kay Hian (Hong Kong) Research who covers China's coal and steel sectors.
Bids for October loading South African cargoes dropped by $1.50 to $83.35 - close to the two-year lows of $82.00 seen in June - and although there was a close offer at $84.00, there was no trade.
Although most players agree mounting production cuts should rebalance the market and see some price increase by the end of the year, the outlook for the next couple of months is bearish.
Early September is usually too soon for the seasonal, post-monsoon rise in Indian spot buying, suppliers and Indian traders said.
Indian end-users, struggling with their own margins, are holding out for lower prices, buying fresh cargoes only when the price is particularly attractive or they have a specfic need.
Until some fresh, large-scale Indian buying tenders are issued, the South African spot market will remain sluggish with prices under pressure, traders said.
TRADES
A November DES ARA cargo traded at $89.50 a tonne, down 75 cents. PRICES
A September South African cargo was bid at $82.00 and offered at $84.00, down 25 cents on the offer.
An October South African cargo was offered at $83.35 and offered at $84.00, down $1.50 on the bid.
A November South African cargo was bid at $85.25, down 75 cents.
An October delivery DES ARA cargo was offered at $89.00, down $1.00 with no bid.
A November DES ARA cargo was offered at $90.00.
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