Market Uncertainty takes toll on South African Thermal Coal as Prices Drop Further
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The fall in the South African thermal coal prices continue this week amid the negative sentiments that have engulfed the global markets as COVID-19 worsens in various countries.
The API index prices have fallen by about 15% in the time span of 20 days starting from 1 Mar'20. In South Africa while the government has adopted stringent measures to combat the spread of the virus, mining and logistics operations are continuing unhindered for the time being resulting in uninterrupted coal supplies from the country.
However, on the demand side, India which is a key importer (more than 60%) of South African coal is currently dealing with tepid domestic demand of non-coking coal from the sponge iron sector, impacting its prices further. SteelMint has heard from its reliable sources that the sponge iron demand is likely to remain under pressure and few standalone furnaces in major locations are planning to curtail productions in order to maintain margins. Apart from this, another key user industry of thermal coal, cement sector demand from the same is also subdued since past few weeks amid slowed down domestic construction activities.
Price assessment
The RB1 grade thermal coal prices from South Africa are being heard in the range of USD 74/MT, whereas RB2 and RB3 grade thermal coal prices are heard around USD 60/MT and USD 51/MT respectively on CFR India basis (at Gangavaram port) for April shipments.
The price for RB1, RB2, and RB3 grade South African thermal coal prices are around USD 63/MT, USD 50/MT and USD 41/MT, FoB basis at RBCT port for April shipment.
The stock and sale price of thermal coal in India's Krishnapatnam port is around INR 5,500/MT for RB2 grade thermal coal whereas at Gangavaram port the same is heard to be as low as INR 4,900/MT given the high stocks at the port.
The coronavirus outbreak has also impacted India's coal imports as the same has been recorded at 17.02 MnT for Feb'2020 against 19.8 MnT in Feb last year.
