India: Portside South African coal prices remain unchanged w-o-w on declining demand

• Drop in sponge offers continue to pressure coal prices
  
  
• Bid-offer disparity continues to inhibit transactions
  
  

Prices of the South African RB2 (5500 GAR) coal in Asian markets remained stable at INR 9,650/t ex-Gangavaram. Prices are hovering at three-month low, as per data maintained with BigMint. Prices of RB3 (4800 NAR) at Gangavaram and Vizag ports were recorded at INR 7,700-7,750/t, unchanged on a weekly basis.

Offer prices for RB2 were heard to be falling for the week, with RB3 on the other hand rising on scarcity of RB3 cargoes. The wide bid-offer disparity continued to strain the deal from taking place despite inquiries from few plants.

Prices of thermal coal remained subdued for the week amid waning demand. The ongoing monsoon in India has led to a decrease in thermal coal demand across various regions, primarily due to reduced coal consumption. Industrial demand has also slowed, as infrastructural projects are on hold until the monsoon ends, which has resulted in limited coal imports.

The demand is expected to rebound after the monsoon. Imports will likely increase from early September as buyers start restocking for the upcoming festival season. Until then, activities will remain subdued, and coastal plants will maintain their regular purchase patterns.

Thermal coal stocks at Indian ports were at 15.36 million tonnes (mnt) last weekend against 15.24 mnt a week ago, up w-o-w, as per data compiled by BigMint.

Deals recorded by BigMint:

• A deal for 5,000 t RB3 concluded at INR 8,350/t exw-ennore.
  
  
• A deal for RB2 was heard to have been concluded by a steelmaker at INR 9,500/t at Vizag port.
  
  
• In another deal, 4,000t of RB3 were heard sold at INR 8,300/t ex-ennore.
  
  
• A deal for 2,000t of RB2 was concluded at Vizag port at INR,9650/t.
  
  

Factors impacting prices

South African prices edge up w-o-w post-Transnet disruption:Prices of RB3 (4800 NAR) have edged up by $1/t and are assessed at $74/t FOB. Also, RB2 (5500 NAR) prices inched up by $1/t to $94/t FOB. The prices edged up on rail line scheduled maintenance at Transnet.

Sponge iron prices down w-o-w: Sponge iron (P-DRI) prices dropped by INR 450/t w-o-w to INR 25,000/t exw Raipur on 26 July.

Outlook

South African coal prices are anticipated to remain on the lower side amid lower demand and falling sponge prices. However, the Transnet maintenance may push prices upward in near term on some expected shortfall.