The South African sea-borne non-coking coal prices that had been falling over the past two months finally moved up in May. From its lowest at USD 49/MT, FoB basis in April (for May shipments), the API Index benchmark price has now touched a mark of USD 59/MT for June shipment.
Offers for RB2 grade coal (5500 kcal/kg) is assessed at USD 41/MT, FoB basis for June shipments. The freight between the two countries is around USD 9.5-10/MT for capsize vessels.
Cement & sponge iron industry resume buying
The vessel line-up data maintained with CoalMint indicates that South Africa’s thermal coal exports to India in the past one month have surged dramatically from 0.17 MnT in last week of April to 0.64 MnT in the third week of May, with the highest bookings being made by traders followed by sponge iron manufacturers.
South African thermal coal’s key consumers in India – cement and sponge iron sector, saw a gradual pickup in their demand and production in May due to considerable easing of lockdown restrictions in the country.
Cement: Market sources revealed that almost all the cement manufacturing companies have resumed their operations (at 45-50% capacity) as the domestic cement demand in India improved from various sectors – infrastructure, retail, rural market, road works (especially in Karnataka and Eastern India) and theNational Highway projects to be completed before the monsoon.
Sponge iron: In case of sponge iron, Central India’s one of the largest merchant sponge suppliers, Bajrang Power was the largest buyer of South African thermal coal in May as it had resumed operations towards April end, post-closure for a month. Apart from this other sponge iron units in India also slowly resumed their operations leading to increased thermal coal imports.
Positive outlook
During April, when thermal coal trade between India and South African coal was almost negligible, the country’s miners had diverted their supplies to Vietnam as its economic activity was relatively resilient compared to other countries.
However, now it seems that Indian buyers are once again at the forefront of buying South African thermal coal and will continue to do so with a further pick-up in industrial activities expected. Given the positive outlook, market experts believe that S. African thermal coal prices are unlikely to fall back to the lockdown levels.
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