India: Imported South African thermal coal portside prices remain stable w-o-w

Market weak on limited trading activities

Subdued demand seen from sponge producers

In the Asian thermal coal market, prices of RB2 (5500 GAR) remained stable w-o-w to INR 9,400/t ex- Gangavaram. However, Prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,900/, remained unchanged w-o-w. Furthermore, monthly prices of RB2 (5500 GAR) rose by INR 100/t as compared to INR 9,300/t in March 2024.

Trading activity was thin in South Africa as market participants were absent due to the Eid holidays. Indian buyers maintained a subdued stance due to robust domestic coal production. State-run miner CIL continued its robust performance in terms of production in FY'24. CIL's production rose by 10% y-o-y to 773.6 million tonnes (mnt) in FY'24 as against 703.2 mnt in FY'23. Total dispatches have risen by 753.5 mnt as compared to 694.7 mnt in FY'23.

According to market participants, a deal of RB2 (5500 NAR) was heard to be concluded for 16,000t at INR 9,350/t at Vizag port. Another transaction for Panamax of RB2 coal was completed at $107/t CIF Vizag port.

Liberty Coal celebrated a significant milestone as the first consignment of coal was transported from Optimum Coal Mine in Mpumalanga to Richards Bay Coal Terminal. Liberty Coal secured agreements with RBCT and Transnet, enabling the commencement of coal exports.

With operational control of Optimum Coal Mine and commitments to address creditors' claims, Liberty Coal aims to rehabilitate the mine and enhance efficiency in coal transportation, expressing gratitude to Transnet for its efforts in improving rail capacity for RBCT. This improved efficiency could contribute to greater stability in coal prices as supply chains become more reliable, potentially attracting more buyers and enhancing market competitiveness.

SA Exports

South Africa's thermal coal exports rose by 4% m-o-m to 5.36 million tonnes (mnt) in March 2024 as against 5.16 mnt in February 2024. However, exports rose by 4.5% y-o-y compared to 5.13 mnt in March 2023. India was the largest buyer of South African coal at 2.33 mnt in March 2024, up by 12% m-o-m as against 2.07 mnt in February 2024.

Sponge iron prices

Sponge iron prices dropped by INR 1,050/t w-o-w to INR 28,700/t exw Raipur on 12 April 2024 due to soft steel demand. This downturn affected market sentiment, driven by a persistent decrease in spot offers due to subdued buying interest. Buying activity within the sponge iron market remained sluggish as buyers had previously fulfilled their orders, resulting in minimal purchasing activity for the week.

South African prices

According to sources, portside prices of RB3 (4800 NAR) coal remained stable w-o-w and are currently assessed at $68/t FOB. Similarly, RB2 (5500 NAR) remained unchanged w-o-w and are currently assessed at $86/t FOB.

Outlook

South African thermal coal import prices are expected to not to see significant change due to limited trading and subdued demand from sponge buyers. Additionally, the market may face downward pressure on prices due to robust domestic production and sufficient coal stocks.