India: Portside South African thermal coal trades subdued amid festive holidays

Portside trades in South African thermal coal continued to remain weak as sponge iron manufacturers avoided taking positions during festive holidays.

The majority of DRI units across Raipur and the eastern zone were temporarily shut.

Tight availability of South African coal at domestic ports, however, lifted low-CV RB3 (4800 kcal/kg NAR) prices by INR 300/t w-o-w at INR 14,600/t at Vizag Port. Offers for mid-CV RB2 (5500 kcal/kg NAR) were at INR 17,200/t with very limited demand among DRI producers.

As per CoalMint vessel line-up data, thermal coal shipments from the country are seen at 0.4 mnt over the next two days.

There has been a decline in vessel arrivals from South Africa over the last two weeks amid the recent supply disruption over Transnet Union workers' strike, wherein deliveries from MPT and DBT Port had weakened due to force majeure.

Weak procurement demand

Amid sufficient coal inventory for the next two months and a volatile exchange rate, procurement volumes of sponge iron manufacturers have declined drastically.

DRI producers have been increasingly blending low-CV RB3 coal with Russian and Australian Carmichael in a 60:40 blending ratio (60 being RB3 coal).

With little room for an increase in sponge iron prices, and an already elevated coal rates, sponge iron manufacturers prefer to go slow in procurement and stick to small-parcel trades.

RB1 prices weak amid low European demand

High-CV RB1 (6000 kcal/kg NAR) grade coal prices remained weak as it fell by $9/t w-o-w to $239/t amid decline in European inquiries.

Mild weather in the European countries around this time has prompted traders to remain in the sidelines as port inventories are nearly full for the upcoming winter season.

However, a major fall in prices also remain limited as market participants are uncertainty over the extent of winter this year and the subsequent demand.

Outlook

Portside demand for low-CV RB3 coal is likely to remain muted this week. Trading activity is expected to revive by the end of next week as manufacturing activity resumes.