In the Asian thermal coal market, prices remained stable amid subdued demand from sponge iron producers. Prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,800/, down INR 400/t. Furthermore, prices dropped INR 800/t m-o-m compared to INR 8200/t in January 2024.
In India, the market is sufficiently supplied, empowering importers to secure lower bids with ample coal stocks. South Africa is experiencing subdued demand from India’s sponge iron sector. Notwithstanding, domestic supply is catering to demand in India, maintaining stability in the market.
State-run miner Coal India Ltd (CIL) continued its robust performance in terms of production in January. 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, 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 100/t w-o-w to INR 26,300/t exw Raipur on 10 February driven by limited buying interest in the spot market. Cautious attitude from buyers along with the continuous decline in prices appears to have influenced buying decisions, resulting in muted market activity throughout the 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 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.