Enquiries for South African thermal coal improve
Port stocks sufficient, spot demand sluggish
In the Asian thermal coal market, prices of RB2 (5500 GAR) dropped by INR 100/t w-o-w to INR 8,500/t ex- Gangavaram. However, prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,400/, stable w-o-w. Furthermore, monthly prices dropped INR 400/t compared to INR 7,800/t in January 2024.
Some coastal power plants, as well as the steel and cement sectors, were directing their enquiries to South African coal, driven by its attractive prices and smoother supply situation. However, the overall demand for India’s thermal coal in the spot market remained sluggish. This was primarily due to the presence of a sufficient level of port stocks. Thermal coal stocks across 21 Indian ports rise by 5% w-o-w on 21 February, 2024, according to BigMint data. During week 7 of 2024, thermal coal stocks at Indian ports stood at 14.16 million tonnes (mnt) compared to 13.50 mnt in week 6, reflecting an increase of 5% w-o-w.
Despite the sluggish demand, transactions are ongoing. However, buyers, who traditionally relied on seaborne supplies, are now indicating a preference for domestic coal. According to an India-based trader, this noticeable shift towards domestic supplies suggests that while there is an improvement in demand, buyers are increasingly favouring domestic coal over imported options.
Deals this week-
- According to market participants, a deal of RB2 (5500 NAR) was heard to be concluded for 1000t at INR 8,500/t at Mangalore port.
- Another deal was heard involving the sale of 2000 t of RB2 coal at INR 8,100/t ex-Vizag port.
- Additionally, 10,000 t of coal were sold at INR 7,000/t ex -Gangavaram port.
- A transaction for 5000 t of RB2 coal was completed at INR 8,600/t ex- Mangalore port.
Sponge iron prices
Sponge iron prices dropped by INR 100/t w-o-w to INR 26,300/t exw Raipur on 24 February. Trading activity experienced an uptick due to enhanced demand seen across different regions. Spot buying activity surged as lower offers enticed buyers, leading to an increase in spot trade volumes compared to the previous week.
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
South African thermal coal import prices are expected to either remain range-bound or decline as market participants adopt a cautious approach, with ample coal stocks available at Indian ports and the rise in domestic production. Nonetheless, there has been a slight uptick in demand this week, which may help keep prices within a stable range.