India: South African thermal coal portside prices drop amid easing geopolitical tension

Prices of RB2 (5500 GAR) coal in the Asian thermal coal market dropped by INR 100/t w-o-w to INR 9,900/t ex- Gangavaram. Similarly, prices of RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 8,300/, down by INR 100/t w-o-w.

Furthermore, monthly prices of RB2 (5500 GAR) rose by INR 500/t as compared to INR 9,400/t in March 2024. Similarly, RB3 prices rose by INR 400/t as against INR 7900/t in March 2024.

State-run miner Coal India Ltd (CIL) continued its robust performance in terms of coal production in April 2024. CIL's production rose by 7% y-o-y to 61.8 million tonnes (mnt) in April 2024 as against 57.6 mnt in April 2023.

During the week, South Africa exported 1.2 million tonnes (mnt) of thermal coal in 15 shipments, with a significant portion, 1.1 mnt, destined for India. Prices of South African thermal coal experienced a decline as concerns regarding geopolitical tensions in the Middle East diminished. Additionally, heightened stockpiles at RBCT coupled with subdued demand exerted further pressure on prices.

Deals for the week

• According to market participants, a deal of RB2 (5500 NAR) for 5,000t was heard concluded at INR 9,800/t at Kandla Port.
  
  
• Another transaction for 5,000 t of RB3 coal (4800 NAR) was completed at INR 8,200 last week ex- Gangavaram Port.
  
  
• Additionally, 5,000 t of RB2 coal were sold at INR 9,850/t ex - Ennore Port.
  
  

SA exports

South Africa's thermal coal exports dropped by 2% m-o-m to 5.27 mnt in April 2024 as against 5.36 mnt in March 2024. However, exports dropped by 6% y-o-y compared to 5.60 mnt in April 2023. India was the largest buyer of South African coal at 2.59 mnt in April, up by 11% m-o-m as against 2.33 mnt in March.

Sponge iron prices

Sponge iron prices rose by INR 1,050/t w-o-w to INR 29,500/t exw Raipur on 4 May 2024. This upward trajectory underscores strong buying activity, as buyers proactively secure materials in response to increasing offers.

South African prices

According to sources, portside prices of RB3 (4800 NAR) coal remained stable w-o-w and are currently assessed at $82/t FOB. Similarly, RB2 (5500 NAR) remained unchanged w-o-w and are currently assessed at $97/t FOB.

Outlook

Imported portside prices of South African thermal coal are expected to increase as expectations of heightened demand from India's sponge iron producers are emerging as they gear up to build stockpiles ahead of the monsoon season, anticipating constraints in domestic production and transportation.