India: Imported South African thermal coal portside prices rise

Improved demand from sponge iron producers

Supplies ease at RBCT after derailment

In the Asian thermal coal market, prices of RB2 (5500 GAR) coal rose by INR 450/t w-o-w to INR 9,850/t ex- Gangavaram. However, prices for RB3 (4800 NAR) coal at Gangavaram were recorded at INR 8,100/, rose by INR 200/t w-o-w. Furthermore, monthly prices of RB2 (5500 GAR) rose by INR 450/t as compared to INR 9,400/t in March 2024.

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.

RINL addresses coal crisis amid port disruption

Rashtriya Ispat Nigam Limited (RINL), facing severe coal supply disruptions due to the halt in operations at Gangavaram, swiftly responded to ensure operational continuity. AGPL's shutdown since 12 April has posed significant challenges to RINL's production.

To mitigate the crisis, RINL adopted proactive measures to secure uninterrupted coal supply:

Diversion of ships to Vizag port: RINL rerouted two vessels to Vizag Port with the support of the Visakhapatnam Port Authority, ensuring raw material security.

Commodity loan: RINL secured a commodity loan of 50,000 tonnes of coal from alternate ports to address immediate shortages.

Global Tender: A global tender was initiated for emergency procurement of 150,000 t of coal, ensuring a diversified supply chain.

South Africa: RBCT rail coal inflows recover post derailment

Rail coal transportation to Richards Bay Coal Terminal (RBCT), SA's prime export hub, rebounded strongly after a recent derailment. Transnet shipped 946,000 t to RBCT by 14 April, up from the previous week's 463,000 t due to the incident on 2 April. The second derailment since 2024 underscored infrastructure vulnerabilities, with a previous collision on 14 January disrupting operations. February saw weekly exports from RBCT hit 1 mnt, surpassing last year's 800,000 t.

Coal shipments via the North Corridor peaked at 1.18 mnt by 25 March but plummeted to 460,000 t post accident. Port inventory dipped 10% by 14 April, reaching 2.4 mnt. Despite disruptions, total coal exports from 8-14 aPRIL 2024 surged to 709,000 t, with 400,000 t destined for India's sponge iron sector.

Local miners planned sales reductions post-incident, driving up high-CV coal prices amidst European market fluctuations and US bridge collapse impacts. Transnet's draft maintenance plan for the North Corridor aims to bolster future coal exports, with an annual overhaul scheduled from 9-18 July potentially affecting shipments.

In 2022 and 2023, rail coal inflows to RBCT averaged 262,000 t and 70,000 t during maintenance periods, respectively.

Deals this week

• According to market participants, a deal of RB2 (5500 NAR) was heard to be concluded for 3,000t at INR 9,800/t at Mangalore port.
  
  
• Another transaction for 40,000 t of RB2 coal was completed at INR 9,600 last week.
  
  
• Additionally, 10,000 t of RB3 (4800 NAR) coal were sold at INR 8,200/t ex -Vizag.
  
  
• Another deal was heard involving the sale of 5,000 t of RB3 coal at INR 8,100/t ex- Gangavaram port.
  
  

SA exports

South Africa's thermal coal exports rose by 4% m-o-m to 5.36 million tonnes (mnt) in March 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 1,250/t w-o-w to INR 29,800/t exw Raipur on 19 April 2024 increased w-o-w following positive sentiments in the semi-finished steel segment. Buying improved in trading session, with a significant surge in bookings seen especially in the central region (Raipur and Raigarh) which accounts for 41% of the total spot trade volumes.

South African prices

According to sources, portside prices of RB3 (4800 NAR) coal rose by 6% w-o-w and are currently assessed at $72/t FOB. Similarly, RB2 (5500 NAR) rose by 5% w-o-w and are currently assessed at $90/t FOB.

Outlook

South African thermal coal import prices are anticipated to increase due to rising demand from sponge producers and easing supply at RBCT port. Additionally, ongoing force majeure at Gangavaram port may further elevate prices.