CAPE TOWN (miningweekly.com) – There was unremitting gloom throughout the export coal supply sector, which was “horribly oversupplied”, IHS Cera senior director global steam coal advisory David Price said on Wednesday.

Market scarcity was needed to get higher prices, but there was no scarcity in sight, Price told the IHS McCloskey South African Coal Exports Conference in Cape Town.

Five per cent of the market needed to go, but there was no sign of that happening.

“We need to ask the mining companies to stop talking the market up, please,” Price commented.

South Africa’s Transnet was doing far better in transport and as was US rail.

South Africa's own inland coal market was currently very tight, however, JSE-listed Wescoal CEO Andre Boje told Mining Weekly Online.

Charts were indicating that at some stage Chinese purchases would begin picking up and China would easily consume four-billion tons this year.

Indian traders have had their fingers badly burnt, but new power stations being built were set to lift demand in time.

Indian generators were finding the going tough in an environment of the power prices being regulated.

Coal demand in Japan, which had eight gigawatts of power plant wiped out by last year’s earthquake, had rallied well.

There was still plenty of potential for the off-spec coal market to bring down the on-spec market.

The supply sector universally had been developing mines to meet Indian and Chinese demand expectations, which China and India would have a hard job living up to.

All additional coal supply being developed currently was being directed at Asia.

“Is everybody perhaps looking at the same customer?” he asked.

The GM of South Africa's State-owned rail transport enterprise Transnet, Divyesh Kalan, told the conference that rail capacity to the Richards Bay Coal Terminal was now exceeding coal available for the line.

Kalan said that Transnet was in discussion with the coal-mining industry to supply more coal for the formerly inadequate rail availability.
 

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