In the Asian thermal coal market, prices witnessed a w-o-w decline amid increased domestic production and tepid demand. Prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,800/, dropped by INR 400/t. Furthermore, monthly prices dropped by INR 800/t as compared to INR 8,200/t in January 2024.
The Indian market is adequately supplied and the importers are well-stocked with coal, enabling importers to negotiate lower bids. On the demand side, South Africa is having continued tepid demand from the sponge iron industry in India. Local demand in India was still met by the domestic supply.
State-run miner Coal India Ltd (CIL) continued its robust performance in terms of coal production in January 2024. CIL’s production rose by 9.1% y-o-y to 78.4 mnt in January 2024 as against 71.9 mnt in January 2023.
South African coal exports
South African coal exports to India were recorded at 1.92 mnt in January 2024, down 39% m-o-m as against 3.17 mnt in December 2023. Buying activity for South African coal remained limited, driven by expectations of further price drops amid subdued demand. The market reflects decreased industrial activity leading to lower consumption and constrained trading. Market participants noted a cautious atmosphere, indicating buyer hesitancy as they await potentially more favourable pricing conditions.
Sponge iron prices
Sponge iron prices dropped INR 150/t w-o-w to INR 26,200/t exw Raipur on 2 January driven by limited buying interest in the spot market. Suppliers responded by lowering their offers across regions, leading buyers to make only need-based bookings. Weak market sentiments and limited trading activity were reported, influenced by uncertainties in spot buying and fluctuating steel prices. Despite the decline, market participants expressed optimism for price stability.
South African prices
According to sources, portside prices of RB3 (4800 NAR) coal remained unchanged w-o-w and are currently assessed at $63/t FOB. Similarly, RB2 (5500 NAR) remained stable w-o-w and are currently assessed at $77/t FOB.
Outlook
The South African thermal coal import prices are anticipated to drop as market participants continue to stay on the sidelines, primarily due to the wide bid-offer disparity and weak demand from sponge iron producers. Furthermore, robust domestic supply in India continues to fulfill local demand, posing potential pressure on South African coal prices.