In the Asian thermal coal market, prices witnessed a w-o-w decline amid subdued demand from sponge iron producers. Prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,800/t, stable w-o-w.
Transnet Freight Rail has successfully restored full coal transportation services to the Richards Bay Coal Terminal, marking a crucial recovery from the disruption caused by a collision between two coal trains on 14 January, 2024. The incident had temporarily halted major rail lines, impacting supply from the North Corridor.
As of now, the resumption of services has propelled the weekly volume of coal transportation on the lines to an impressive 1.5 mnt. The RBCT terminal, with a coal handling capacity of 91 mnt per annum, shipped 47.2 mnt of coal last year, down 6.2% y-o-y.
Despite the temporary setback, prices of South African thermal coal have remained largely stable, given the subdued overall demand from major consumers during this week.
To enhance coal exports and mitigate congestion issues, a strategic move has been made with the commissioning of a new conveyor belt at the Richards Bay Dry Bulk Terminal. This development is anticipated to facilitate a notable increase in coal shipments, thereby alleviating the reliance on trucks that previously congested access roads to the terminal due to limited rail infrastructure capacity. Consequently, this improvement is expected to contribute to a further drop in coal prices.
Sponge iron prices
Sponge iron prices dropped INR 50/t w-o-w to INR 26,300/t exw Raipur on 25 January due to a lack of buying interest in the spot market this week, prompting suppliers across regions to lower their offers.
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 market is on the verge of a downturn in the short term, primarily due to sluggish demand from sponge iron producers. Moreover, the resumption of coal transportation services, which will enhance supply and alleviate congestion at the Richards Bay Terminal, are expected to contribute to a decline in prices.