India: Portside South African coal prices under pressure on falling sponge iron prices

• Sponge iron prices continue to drop
  
  
• Thermal coal port stocks inch up w-o-w
  
  

BigMint's assessment for South African coal, RB2, portside prices remained stable w-o-w at INR 9,650/t ex Gangavaram. Prices of RB3 (4800 GAR) at Gangavaram and and Vizag ports were recorded at INR 7,700-7,750/t, unchanged w-o-w. Buying inquiries from India remained weak during the week amid rains and falling steel prices. There is interest in low-to-mid calorific value cargoes, but many inquiries are not converting into firm bids due to high port stock levels.

A few offers were also heard at around INR 9,400/t at Mangalore port. Also, RB3 cargoes were very scarce in the market.

Confirmed trades:

• A capesize vessel of RB1 was booked at $114.5/t, FoB for September shipment
  
  
• 75,000t of South African RB2 sold at $90/t FoB.
  
  
• A deal was heard for 5000 t RB3 at around INR 8,200-8,300/t ex- mangalore port.
  
  

Factors driving portside coal prices:

• RB3 prices range-bound: Prices of RB3 (4800 NAR) coal have have remained stable at $75/t FOB. Prices for RB2 (5500 NAR) have inched down to $93/t FOB.
  
  
• Sponge iron prices fall w-o-w: Sponge iron (P-DRI) prices dropped INR 750/t w-o-w to INR 24,200/t exw Raipur on 9 August. Falling finished steel prices and weak demand have continued to weigh on Indian sponge prices.
  
  
• Thermal coal port stocks rise:Non-coking or thermal coal stocks at Indian ports were at 14.5 million tonnes (mnt) in week 31 against 14.37 mnt in week 30, up marginally w-o-w.
  
  
• Rise in domestic coal prices: Amidst supply disruptions caused due to rains, domestic coal prices have improved. Besides, end-users are demanding domestic washed coal (5000 GCV) which has boosted prices of this grade which increased INR 600/t w-o-w from INR 5,400/t exw Bilaspur last week to INR 6,000/t exw this week.
  
  

Outlook

The Indian market for South African coal remained stable this week, with RB2 and RB3 prices holding firm amid limited demand and vessel scarcity. Despite domestic supply disruptions due to heavy rainfall, weak buying interest, particularly in the sponge iron sector, has kept import inquiries low.