Turkey cement demand boosts Russia B.Sea coal price

Turkey cement demand boosts Russia B.Sea coal price
Published: 30 March 2007

Prices for small, prompt cargoes of cleaned Russian coal from the Black Sea ports have risen to $70 a tonne FOB during the past couple of weeks, due to strong demand, principally from the Turkish cement industry.

Turkey’s construction boom is fuelling demand for cement and because coal is needed as both a fuel and raw material for cement production, imports are rising, Russian exporters and traders said.

There are a few large, established Turkish cement makers but a growing number of small cement producers who are seeking steam coal in handysize cargoes.

Turkish cement makers have been paying up to the equivalent of $70 a tonne FOB Black Sea for prompt Russian cargoes during the past two weeks, exporters said.

Cement makers usually buy on a CIF basis and recent prices have been over $80 CIF, exporters said.

This is a similar pattern but on a smaller scale, to the cement-driven boom in coal imports which began in India, in January, producers and traders said.

Turkey imported around 4.5 million tonnes of steam coal in 2006 for the power generation and cement sectors and some market sources forecast a similar quantity of imports this year.

Russian exporters said the imports look likely to be higher this year, based on current higher spot demand from the cement sector. But it is too early to try and estimate how much higher they could be, exporters said.

Turkey imports South African sized coal which is used to heat homes but current Richards Bay to Turkey freight rates are too high for South African steam coal to be competitive.

Most of the prompt coal demand from the Turkish cement sector is for handysized vessels of 20.000-25.000 tonnes, Russian exporters said.

Richards Bay to Turkey handysized freight is close to $30, they said, plus spot coal prices of $54.00-$55.00.