Portside trading activity of South African thermal coal picked up pace this week on account of strong demand from the sponge iron sector for the imported material over domestic.
Despite elevated prices, trade activity has been stepped up even as domestic coal dispatches to the non-power sector remain limited and sponge iron demand has improved slightly almost 40-45 days since the Indian government announced the duty on steel exports.
PDRI sponge iron prices, in fact, have risen by INR 1,300/t w-o-w and by INR 3,000/t m-o-m in the Raigarh, Chhattisgarh market.
Prices of low-CV RB3 (4800 kcal/kg NAR) grade coal at Gangavaram Port remained firm this week, w-o-w basis, in the range of INR 16,000-16,200/t, while the mid-CV RB2 (5500 kcal/kg NAR) was at INR 18,000-18,300/t. Prices exclude cess and GST.
Besides higher RB3 bookings, RB2 trade also picked up as sponge iron manufacturers took the opportunity to secure stock. Uncertainty surrounding global coal prices amid Europe’s strong demand has made buyers cautious before delaying purchases.
The ratio of imported versus domestic coal usage in PDRI manufacturing is currently assessed at 70:30 ratio (imported coal: domestic) as against 50:50 earlier this year.
Strong European demand for South African coal
With the approaching deadline for Russian sanctions, South African high-CV coal prices continue to rise as RB1 (6000 kcal/kg NAR) rates were assessed at $355/t FOB as on 8 July, up by $12/t w-o-w.
The country’s coal exports to major coal importing countries in Europe have risen to a whopping 5 mnt in the first six months of the year as against a mere 0.05 mnt last year, CoalMint data showed.
Mid-CV RB2 prices also followed suit with $55/t rise w-o-w to $255/t FOB, while that of RB3 were up by $10/t w-o-w to $170/t FOB.
Short-term outlook
Portside trade in South African coal is likely to remain elevated in line with higher imported coal prices and domestic unavailability. However, buyers would prefer to make small purchases and avoid bulk buying.
To know more about the South African coal demand in the domestic sponge iron industry join us at India Coal Outlook Conference. CoalMint will be hosting the India Coal Outlook Conference on 3-4 August 2022 at The Lalit, New Delhi, to discuss the key issues pertaining to domestic coal production and supply, the government’s objective of controlling imports and domestic supply gap affecting many industries, the need to increase the purchasing power of Indian steel companies in the volatile global coking coal market as well as issues related to decarbonization of the coal value chain.
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