"South African prices are over $82.00 FOB and freight is nearly $50 so I doubt they will be able to buy anything for less than $130.00 CIF," one Indian trader said.
"We've put out offers of around $135.00 a tonne to end-users and we're waiting to hear back. But we believe they have no choice but to get used to these numbers and pay the market price," another Indian trader said.
Binani Cement Ltd, Gujarat Ambuja Cements Ltd, and Birla Copper (part of the Aditya Birla group all recently issued tenders for South African cargoes.
Binani is seeking three panamax cargoes for delivery in January to April, Ambuja wants a December cargo and Birla wants three panamaxes for January to May delivery.
All three buyers are expected to award next week.
"Whatever they pay this time will set a new benchmark for the other Indian consumers. We expect to see more buying then because other consuemrs have been holding back," the first Indian trader said.
Ambuja paid $126.00 a tonne CIF for a South African cargo for November delivery to a third Indian trader but this was nearly two weeks ago and prices have risen since then, traders said.
"There is no reason for the South African prices to come down. Indian demand on its own is strong enough to keep prices high," the first Indian trader said.
India imported over 5.5 million tonnes from South Africa in the first six months of 2007. The year's total imports are expected to be over 10 million tonnes.
Imports for 2008 are likely to be at least 2007's level despite the start-up of petcoke production at a new Reliance plant which will replace some of the coal demand by the cement industry.