South African Non-Coking Coal Export Offers to India weakens amid Tepid Demand

The South African thermal coal export prices especially that of lower grades, RB2 and RB3 have registered a plunge this week, going down by around USD 4-5/MT, CoalMint learned from market sources.

The non-coking coal prices of grade RB2 are trending at USD 63-65/MT and that of RB3 it is at USD 49-51/MT, FoB basis at RBCT port, South Africa for March loading. While the non-coking prices in the country increased last month due to the supply disruptions from heavy floods, the prices have retracted to the previous levels.

South Africa is a key exporter of thermal coal with the largest share of coal exports (especially RB2 and RB3) going to India in 2019. Coal exports from the RBCT (Richards Bay Coal Terminal) totalled 72 MnT in 2019, down from 73.5 MnT in 2018, and 76.5 MnT in 2017.
Subsequently, the thermal coal demand for lower grade coal from India is also one of the key reasons for price variations in South African prices.

Currently, sponge iron (which is manufactured using thermal coal as a reducing agent) demand and prices in India are moving down amid the remarkable fall in scrap prices, that act as an alternative to sponge iron for steel production in electric furnaces. The recent outbreak of Corona virus in China is also adversely impacting various metals demand globally including that of steel resulting which limited trade has taken place this week.

Panamax dry-bulk shipping freight rates from the Richards Bay Coal Terminal (RBCT) to India are in the range of USD 14 to 14.5/MT whereas, for that of capesize, it is in the range of USD 11-11.5/MT. The discounts for RB2 are continuing to be in the same range of USD 9-11/MT and that of RB2 it is USD 15-17/MT.

"The South African coal market is going soft. The buying transactions this week were limited in India and market is in a wait and watch mode. Will the prices move down further or sustain remains to be seen in next two weeks", quoted a market participant based in India.