India: Portside South African thermal coal prices rise on support from steel prices

• Thermal coal imports from SA up 39% m-o-m in Sep
  
  
• Sufficient availability may pressure down prices
  
  

BigMint's assessment indicated that portside prices of South African thermal coal inched up towards the weekend. Prices of RB2 (5500 GAR) were assessed at INR 9,350/tonne (t) and RB3 at INR 7,600/t, both up INR 50/t, ex-Gangavaram. Rising sponge iron prices and improved sentiments in the steel market prompted some domestic traders to raise their offers.

The market expects that pre-festive season buying will increase in the coming week. Indian buyers are fulfilling pre-festival demand through domestic coal, whose production has remained strong throughout the year. With the festive season approaching, market participants expect a rise in domestic steel prices and demand, which will drive up the procurement of fresh thermal coal from South Africa. India's steel industry favours South African thermal coal for its fuel needs due to its lower transportation costs, competitive pricing, and suitable specifications.

Non-coking coal stocks at Indian ports dipped 1.6% to 12.90 million tonnes (mnt) in week 39 from 13.11 mnt in week 38, CY'24, according to BigMint's data. Meanwhile, India's thermal coal imports from South Africa surged 39% to 2.5 mnt in September 2024, as against 1.8 mnt in August 2024.

Deals captured by BigMint during the week

• About 25,000-30,000 t of RB2 were sold on the east coast of India at INR 9,400-9,550/t.
  
  
• A steel player booked 5,000 t of RB2 coal at INR 9,450/t exy-Mangalore.
  
  
• A deal for 75,000 t for October loading was heard at $89/t FOB.
  
  

Market overview

• RB3 prices edge up: RB3 (4800 NAR) offers picked up by $1/t w-o-w to $69/t FOB, while RB2 (5500 NAR) prices edged up to $89/t FOB. South African thermal coal prices increased, spurred by a rise in inquiries from several Asian buyers looking to replenish their inventories in preparation for fourth-quarter demand.
  
  
• India's domestic coal prices remain supported: India's domestic coal prices remained supported this week by imported prices and demand. Future hikes are expected as demand gradually rises. BigMint's assessment shows that 4500 GCV coal stood at INR 5,700/t exw-Bilaspur, stable w-o-w, while 5000 GCV was at INR 6,500-6,900/t, up INR 150/t w-o-w.
  
  
• Sponge iron prices trend upward: Sponge iron (P-DRI) prices rose INR 2,150/t w-o-w to INR 29,050/t exw-Raipur on 4 October.
  
  

Outlook

South African coal prices may move in a narrow range amid pre-festive buying and a pick-up in steel demand. However, sufficient availability of stocks may put pressure on prices in the coming weeks.