India: Portside South African coal prices rise w-o-w amid depleting stocks

Strong demand from Indian buyers in the Asian coal market raised hopes of higher prices among sponge producers. Prices of RB2 (5500 NAR) coal at Vizag port rose by INR 300/t w-o-w to around INR 10,500/t. Prices rose by INR 1,550/t m-o-m to INR 10,500/t. The sponge iron sector in India was seen to be focused on acquiring South African coal. Indian producers have increased freight availability, notably for October-loading shipments. The disparity between offers and bids remained wide across grades, as sellers maintained their offer levels in order to remain competitive in the current market. Market participants were seeing firm demand from India-based buyers due to depleting stocks at ports.

Trading activity was also seen gearing up in the country. South African thermal coal exports rose by 12% m-o-m to 5.07 million tonnes (mnt) in August 2023 as against 4.51 mnt in July. India was the largest buyer of South African coal at 1.78 mnt in August, up 76% m-o-m as against 1.01 mnt in July. Shipments to India rose amid firm demand from sponge producers.

Rise in domestic production
State-run miner, Coal India Ltd (CIL), posted double-digit growth in coal production during August. Production rose by 13% y-o-y to 52.3 mnt as against 46.2 mnt in August 2022.

Sponge iron prices
Sponge iron prices dropped by INR 100/t w-o-w and are currently assessed at INR 30,450/t exw Raipur. As per sources, prices of sponge have dropped owing to higher offers. Buyers did not accept such high offers while purchasing.

Deals for the week

• As per talks with market participants, a deal was concluded at Vizag port for 5,000t for RB3 (4800 NAR) at INR 8,900/t.
  
  
• Another deal was heard from Vizag for 9,000t for RB2 (5500 NAR) at INR 10,500/t.
  
  
• A deal was heard from Gopalpur port for about 12,000t for RB2 (5500 NAR) at INR 10,300/t.
  
  
• A week ago, a Supramax vessel was booked for Gopalpur port for RB3 (4800 NAR) at $100/t, CNF India.
  
  
• A transaction was heard for 2 rakes of RB2 (5500 NAR) from Gangavaram port at INR 10,400/t.
  
  
• A Supramax vessel trade for RB2 (5500 NAR) was heard at $114/t, CNF India.
  
  
• A deal was concluded last week for a Panamax vessel for RB2 (5500 NAR) at $100/t FOB, Vizag port, for October loading from RBCT terminal.
  
  

South African coal prices

As per sources, portside prices of RB3 (4800 NAR) coal at Gangavaram port picked up slightly to around INR 8,700/t. Also, RB2 (5500 NAR) prices rose by 3% w-o-w and are currently assessed at $103/t FOB.

Outlook

It is anticipated that prices may rise amid rising demand and limited low-CV coal availability. Moreover, the depletion of coal inventories at ports may push prices higher.