India: South African thermal coal portside prices remain unchanged on reduced buying interest

In the Asian thermal coal market, prices remained stable amid buyers' resistance over current price levels and tepid demand from major consumers due to healthy stocks at ports. Prices for RB2 (5500 NAR) coal at Vizag Port were assessed at INR 9,500/t.

Despite logistical constraints, quotes remained under pressure, given rising freight rates and weaker demand for imported coal in India, driven by improving domestic supply. The situation with congestion involving coal trucks at other terminals of the port of Richards Bay is not yet improving, with suppliers facing high demurrage and complaining of profit losses.

Although there were inquiries for mid-CV coal from the sponge-iron industries, the overall demand remained subdued. Market participants noted a restrained market, indicating buyer hesitancy as they anticipated more favourable pricing conditions.

December is usually the month with the lowest trade volumes, and spot activity in the physical thermal coal market, experiencing a notable slowdown as well.

Despite this, interest persisted for RB2 (5500 NAR) in the market, however, demand for RB3 (4800 NAR) continued to remain subdued. Imported vessels for RB3 remained on lower side.

India was the largest buyer of South African coal at 2.34 mnt in November 2023, down by 4% m-o-m as against 2.43 mnt in October, 2023.

Sponge iron prices

Sponge iron prices rose by INR 500/t w-o-w to INR 27,750/t exw Raipur on 15 December, 2023. Indian sponge iron prices have been experiencing significant fluctuations, driven by mixed sentiments in the semi-finished steel segment. Despite this volatility, there has been a slight increase in buying activity supported by improved buying of semi-finished and finished steel.

South African prices

As per sources, portside prices of RB3 (4800 NAR) coal dropped by 7% w-o-w and are currently assessed at $76/t FOB. Similarly, RB2 (5500 NAR) prices dropped by 2% w-o-w and are currently assessed at $93/t FOB.

Outlook

The South African thermal coal prices are anticipated to witness downward trend going forward amid rise in domestic production and buyer resistance at current price levels. Moreover, persistent congestion of coal trucks at Richards Bay port terminals do not see any immediate resolution.