South African Non-Coking Coal Prices Fall amid dull Market Sentiments

South African non-coking coal prices have recorded a significant plunge this week amid negative global sentiments and soft demand from India which is one of its key export destinations.

The API Index shows RB1 prices at USD 76/MT, FoB basis at RBCT port in South Africa for March loading (down by USD 6/MT w-o-w basis) whereas RB2 grade price is being heard at around USD 62/MT and RB3 is at around USD 48/MT, FoB basis.

The thermal coal offers to India from South Africa for RB2 grade are being heard at USD 70/MT and RB3 grade at USD 58/MT, CNF India basis for March loading (down by around USD 8 and USD 4 respectively).

The discounts in India for RB2 are being heard at similar levels of last week at around USD 9-11/MT and that of RB3 is at USD 15-18/MT. 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 capsize, it is in the range of USD 11-11.5/MT.

The domestic stock and sale price of thermal coal of RB2 grade is heard to be at around INR 5,800/MT and RB3 at INR 4,700/MT at Gangavaram port and at around INR 6,000/MT for RB2 ar Krishnapatnam port

Market Sentiments

The key reason that can be attributed to the fall in South African coal prices are the negative sentiments that have engulfed the global steel market amid the Coronavirus outbreak in China which is now spreading in other countries also.

Apart from this, the demand for South African coal from India is also quite dull at present as the sponge iron manufacturers have high inventories with them and the domestic steel demand is not at its peak, CoalMint has learnt from its market sources. Though the official numbers are not out, it can be assessed from the vessel line-up data with CoalMint that India's thermal coal imports from South Africa are likely to increase in February against last month of Jan'20. This means that buying have been already done by the market participants and now they are in wait and watch mode amid the market volatility.

However, few traders based out of India are of the opinion that the South African thermal coal prices may observe an increase in next two weeks as the prices have fallen more than what was anticipated and further fall in the prices are unlikely.