India: South African thermal coal portside prices drop w-o-w amid healthy stocks at ports

In the Asian thermal coal market, prices dropped by INR 200/t w-o-w amid ample stocks at ports with major consumers and weak demand from sponge producers. Prices for RB2 (5500 NAR) coal at Vizag Port were assessed at INR 9,300/t. Trading activities remained sluggish during the post-Christmas and pre-New Year's week, with market participants largely absent from the desk.

According to market participants, the price is falling in Indian market because the South African coal has a lot of cargoes available and they are offering at a very discounted, very competitive price. Sellers, facing a cautious market, are making efforts to offload stocks at levels below the index, leading to compressed profit margins.

Notably, buyer activity for purchasing South African coal has been limited, driven by expectations of further price drops amid subdued demand. The market reflects unchanged demand from the previous week, marked by decreased industrial activity, leading to lower consumption and constrained trading. Market participants reported a cautious and restrained atmosphere, indicating buyer hesitancy as they await potentially more favourable pricing conditions.

Imported vessels for RB3 (4800 GAR) also remained on the lower side, reflecting the overall subdued sentiment in the market.

Sponge iron prices

Sponge iron prices dropped by INR 550/t w-o-w to INR 26,450/t exw Raipur on 29 December, 2023. Despite persistent price volatility, spot trading activity remained constrained. Buyers, amid the uncertainty in spot purchases and fluctuating steel prices, expressed a preference for lower-priced materials. Cautious perspective from buyers' end, along with the continuous decline in prices and festive holiday, appeared to have influenced buying decisions, resulting in muted market activity.

South African prices

As per sources, portside prices of RB3 (4800 NAR) coal remained stable w-o-w and are currently assessed at $76/t FOB. Similarly, RB2 (5500 NAR) prices remained unchanged w-o-w and are currently assessed at $93/t FOB.

Outlook

The South African thermal coal market anticipates a downward trend going forward due to subdued demand from sponge producers and ample port stocks. Sellers, navigating a cautious market, are making efforts to offload stocks below the index level, resulting in compressed profit margins.