India: Portside South African coal prices drop as sponge offers remain under pressure

• Thermal coal market remains weak on low buying
  
  
• Stock levels at Indian ports expected to meet monsoon demand
  
  

Prices of the South African RB2 (5500 GAR) coal in the Asian market fell by INR 100/t to INR 10,000/tonne (t) ex-Gangavaram. Prices of RB3 (4800 NAR) at Gangavaram and Vizag Ports were recorded at INR 8,100/t, down INR 100/t w-o-w.

The thermal coal market continued to remain weak on low buying from major consuming nations. Anticipated demand rise from China is projected to push prices. However, on sufficient stocks at China, buying continues to remain in the downside.

Indian demand fundamentals have remained largely unchanged. Buyers are well-stocked due to increased domestic production in recent months and improved coal transportation from domestic mines to plants, due to a rising number of rakes. Additionally, stock levels at Indian ports are healthy and are expected to meet the monsoon demand adequately.

• 5,000 t RB2 coal booked at INR 10,000/t ex Mangalore.
  
  
• Deals were heard concluded for about 4,000 t of RB2 at INR 9,900-10,000/t at Vizag port.
  
  

Factors impacting prices

South African prices down w-o-w:Portside prices of RB3 (4800 NAR) have dropped by $2/t and are assessed at $71t FOB. Also, RB2 (5500 NAR) prices fell by $2/t to $91/t FOB.

Rail maintenance schedule: South Africa's Transnet Freight Rail's (TFR's) annual maintenance on the coal line has been delayed by two weeks to 23 July-1 August. Supplies to the port have been impacted by frequent derailments, cable thefts, network failures, and broken tracks along the North Corridor line. The two-week delay in maintenance will enable TFR to increase rail deliveries to Richards Bay Coal Terminal (RBCT), thereby boosting port stocks to meet export demand during the maintenance period.

Sponge iron prices edge down w-o-w: Sponge iron (P-DRI) prices edged down by INR 50/t w-o-w to INR 25,650/t exw Raipur on 12 July.

Outlook

South African coal prices continue downtrend and is expected to witness similar traits in short term on low buying interest and minimal transactions taking place. The reduced demand has created bid-offer disparity, creating it more of a seller market.