Korean Gencos Show No Interest in South African Coal

BRISBANE, Australia - July 15, 2013 - PRLog -- At the same point last year, more than 2.1mt of South African coal had found a home in South Korea, although that dramatically tailed off in the later eight months when only another 0.62mt found its way through.

South African coal has consistently trailed Australian, Indonesian and Russian into South Korea in the last few years, and by considerable margins, but records show it hasn’t been completely out of favour since back in 2006, with 2-3mt finding its way there in each of the last three years.

South Korea’s lack of love for South African coal at this time is understood to boil down to one thing – price.

One source told MCR that South African coal simply hadn’t been competitive enough to overcome the gap in freight rate with Australian or Russian coal.

Outside of the nosedive in interest in South Africa, South Korea has lifted the number of tonnes bought from Australia, Indonesia and Russia across the period.

For Australian, South Korea imported 14.1mt from Jan-April, up from 11.7mt in the same spell of last year and comparing favourably with the 36.6mt and 34.9mt taken in the whole of 2012 and 2011 respectively.

Indonesian coal into South Korea is up to 13.2mt for the four months from 12.9mt in the same period a year prior and against 37.9mt across the whole of 2012.

Russian material into South Korea sits at 3.8mt from 3.1mt for the same four month spell year on year, with 10.7mt for the whole of last year.

Across the last two weeks, tender activity has been quiet in South Korea, with only Kowepo in the market out of the country’s five generators, with two spot tenders issued.

The most recent two part spot tender is for up to 0.34mt of supplies for its Taean power plant, with the generator seeking either one 70,000t panamax or one 0.13mt capesize shipment of 5,700kc NAR material for delivery by September 15.

The timeframe for shipments sets out departure from Russian ports from September 1-10, Australian and Canadian ports from August 16-30, and South Africa’s Richards Bay from August 6-20.

In the second requirement, Kowepo is looking for three 70,000t panamax shipments of 4,600kc NAR material, with the first for delivery from July 1-15 on a FOB basis or July 20 on a CFR basis, the second from July 16-30 FOB or August 5 CFR and the third from August 1-15 FOB or by August 20 CFR.

For the 5,700kc NAR material, Kowepo is seeking a max moisture content of 15%, max ash of 17% and max sulphur of 1%, while specs for the 4,600kc NAR material are max moisture of 28%, max ash of 17% and max sulphur of 1%.

The deadline for offers is June 18. This latest tender is Kowepo’s tenth approach to the market this year.

Kowepo has one other spot tender currently open for 0.17mt of supplies for Taean, covering 5,700kc NAR coal, with the deadline for offers having closed on Friday, June 14.

The two part tender calls for two panamax shipments from Australia, Canada or South Africa between August and October.

One 85,000t shipment is sought from August 15 - September 5 out of the Australian or Canadian ports or from August 20 - September 10 out of Richards Bay, South Africa.

The other 85,000t shipment is required from Australian and Canadian ports between September 20, or out of Richards Bay between October 1 - 31.

Coal with a total max moisture of 15%, max ash of 17% and max sulphur of 1% is requested.

Last month Kowepo bought two panamaxes of sub-bituminous Indonesian coal through a spot tender calling for 0.14mt of supplies for Taean.

The generator made the purchase at a price below $76/t FOB on a 6,080kc NAR basis.

A joint tender by all five of South Korea’s gencos for term supplies is understood to be on the horizon, although further details have yet to emerge.

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