India: Portside prices of South African thermal coal remain firm w-o-w

• Ample port stocks reduce appetite for seaborne coal
  
  
• Domestic coal prices drop following recent auctions
  
  

BigMint's latest assessment shows that portside prices of South African thermal coal remained stable w-o-w. RB2 (5500 NAR) was assessed at INR 9,500/tonne (t) and RB3 at INR 7,600/t, both ex-Gangavaram, though some offers were also heard at above INR 8,000/t for the latter. However, deals are yet to be concluded at such levels.

Reportedly, there were fewer import vessels for RB3 due to a preference for RB2. A deal was heard to have been recently concluded for a Panamax vessel with RB2 at $91/t FOB from the Richards Bay Coal Terminal (RBCT) Port.

Recently, sponge iron makers have shown a preference for domestic coal over imports from South Africa, owing to its cost-effectiveness. Domestic coal prices fell INR 400-500/t this week, following the auction from South Eastern Coalfields Limited (SECL) on 19 November.

At the same time, thermal coal stocks at Indian ports increased by 4.3% to 12.36 million tonnes (mnt) in week 47 from 11.85 mnt in week 46, as per BigMint's data.

Additionally, sufficient port inventories have reduced the appetite for seaborne coal. The falling finished steel market also continues to pull down raw material prices, and hence, imported coal is facing downward pressure, with buyers refraining from raising bids.

Market overview

• RB3 prices hold steady w-o-w: South Africa's RB3 (4800 NAR) offers remained stable w-o-w at $70/t FOB. RB2 (5500 NAR) prices were unchanged w-o-w at $89/t FOB.
  
  
• Domestic coal prices remain stable: India's domestic coal prices remained stable this week, following a cumulative decline of INR 400-500/t since the SECL auction on 19 Nov. According to BigMint's assessment, 4500 GCV and 5000 GCV grades stood at INR 5,500/t and INR 6,800/t exw-Bilaspur, respectively. Steady pricing was observed despite fluctuations in auctioned coal volumes over the past week.
  
  
• Sponge iron tags drop: Sponge iron (P-DRI) prices fell INR 850/t w-o-w to INR 24,500/t exw-Raipur on 29 November.
  
  

Outlook

The Indian thermal coal market is expected to remain range-bound in the near term due to high port stocks, softening sponge iron demand, and the preference for domestic coal. Any uptick in prices will be limited unless there is a shift in downstream market conditions or import demand.