While South Africa's red-hot export coal prices have traders seeing levels of $200/t free-on-board (FOB) being only "days away", a local expert believed that prices would fall to around $120/t by the end of the year.
Current price levels were "anomalous" Wood Mackenzie senior coal analyst Xavier Prevost told Mining Weekly Online on Wednesday, adding that they "need to go down now".
He said that in the third quarter of this year, he believed there would be a definite decrease in the Richards Bay Coal Terminal (RBCT) FOB prices.
"By the end of the year, they might reach the price levels of the beginning of the year," stated Prevost, giving a figure of around $120/t.
"There must be a correction but we don't think prices will fall by much, or for long," Reuters quoted a major Indian trader as saying.
The newswire reported that Australian coal had already scaled the $200/t milestone on Tuesday, and that there "can't be that much of a gap between" that price and RBCT's price, quoting an unnamed trader.
Meanwhile, Bloomberg News said on June 30 that prices at RBCT had climbed to $159/t in the week ended June 27, citing data from McCloskey Group, adding that there was "little reason" for coal prices to weaken in the months ahead.
"Looking back, nobody was predicting, nobody could have predicted, that prices would rise this much," one producer source told Reuters.
Prevost echoed this sentiment. "I didn't know that they would go to $170/t," he conceded.
RBCT, the biggest single coal terminal globally, is the biggest steam-coal supplier to European countries.
CORRECTION?
Later on Wednesday, North American coal stocks fell sharply as coal prices declined in Europe and the US.
Reuters reported that European benchmark coal slid as much as $25 a ton during the day, to below $200, prompting a $20/t decline in US benchmark coal.
Fording Canadian Coal, which has a majority stake in the world's second-largest metallurgical coal exporter, the Elk Valley Coal partnership, fell 16,2%, to C$81,70.
Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
EMAIL THIS ARTICLE SAVE THIS ARTICLE
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
