Portside prices of South African RB3 (4800 NAR) thermal coal at Vizag Port have fallen by INR300/t to around 11,500/t levels since last few weeks. While at Gangavaram Port prices are assessed at around 11,600/t ex-port basis. Prices include cess and GST.
Overall, trade has been limited, of late. As per market participants, small-parcel trades were carried out by sponge iron producers, based on their requirements. The buyers are, in fact, awaiting further correction in prices before making more procurements.
Sponge iron offers have dropped by up to INR 600/t this week. The highest decline was seen in the eastern region’s Jharsuguda market. However, due to piled-up stock with suppliers (manufacturers), the prices showed negative directions. The price for PDRI is currently assessed at INR 33,700/t exw-Rourkela and INR 32,300/t exw-Raipur.
Imported South African coal prices drop
In the past month, RB1 (6000 NAR) grade prices have come down by $43/t and are currently assessed at $169/t FoB and this came amid sluggish global demand. In the case of the now popularly-used RB3 (4800 NAR), a confirmed deal for 50,000 t was heard at $125/t, CNF Paradeep Port for February-arrival.
Thermal coal markets were a prominent beneficiary of Europe’s power sector turmoil in 2022, with prices surging more than 250% through mid-March as utilities and trading firms scrambled to replace lost supplies of Russian natural gas with other fuels.
However, thanks to a recent plunge in European natural gas prices — down 60% since December 2022, on mild winter temperatures, filled storage tanks and diminished industrial use — European coal prices and demand have slumped so far in 2023.
Subsequently, South African coal prices have also plunged. Earlier, prices of the same had risen as this was being diverted to the EU market in good volumes post-sanctions on Russian coal by western countries.
Outlook
The portside prices may come down further if imported thermal coal prices fall. Given the ongoing scenario of sluggish demand in the EU market and also with winter seen weakening by February-end in the northern hemisphere, South African thermal coal prices are likely to fall in the coming months.
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