Limited enquiries amid rising domestic production
Rising freight may may exert upward pressure on prices
In the Asian thermal coal market, prices of RB2 (5500 GAR) rose by INR 350/t w-o-w to INR 9,300/t ex- Gangavaram. However, Prices for RB3 (4800 NAR) coal at Gangavaram Port were recorded at INR 7,800/, up by INR 50/t w-o-w. Furthermore, monthly prices of RB2 (5500 GAR) rose by INR 700/t as compared to INR 8,600/t in February 2024.
Lower inventories at RBCT port kept prices supported. Additionally, market observers noted that rising freight rates could exert further upward pressure on prices. However, rising domestic production in India led to limited enquiries this week.
RBCT faces cargo loading concerns as stocks plummet
Richards Bay Coal Terminal stocks at 2.31 mnt raise concerns of cargo loading slowdown. Inventories have declined 25% from 3.09 mnt a month earlier. Limited rail capacity led RBCT shareholders to depend heavily on coal reserves. Transnet cites adverse weather, power outages, and cable theft impacting cargo transportation.
Domestic production-
State-run miner Coal India Ltd (CIL) continued its robust performance in terms of production in February 2024. CIL’s production rose by 9% y-o-y to 74.8 mnt in February 2024 as against 68.8 mnt in February 2023. During the month, coal dispatches posted a rise of 12% y-o-y to 65.3 mnt compared to 58.3 mnt in February 2023.
SA exports
India was the largest buyer of South African coal at 1.91 mnt in February 2024, down 8% m-o-m as against 2.08 mnt in January 2024. Some coastal power plants, as well as steel and cement sectors, were directing their inquiries to South African coal, driven by its attractive prices and smoother supply situation. Despite the sluggish demand, transactions are ongoing. However, buyers, who traditionally relied on seaborne supplies, are now indicating a preference for domestic coal.
Deals for the week-
- According to market participants, a deal of RB2 (5500 NAR) was heard to be concluded for 12,000t at INR 9,400/t at Vizag Port.
- Another deal was heard involving the sale of 5,000 t of RB2 coal at INR 9,600/t ex-Mangalore port.
- Additionally, 8,000 t of RB2 coal were sold at INR 9,500/t ex -Vizag.
- A transaction for 5000 t of RB2 coal was completed at INR 9,450/t ex- Mangalore port.
- Another deal was concluded from Mangalore Port for 10,000 t of RB2 (5500 NAR) at INR 9,600/t.
Sponge iron prices
Sponge iron prices rose by INR 550/t w-o-w to INR 26,250/t exw Raipur on 9 March 2024. Increased buyer activity, responding to higher offers, drove the uptrend. Trading volumes saw a slight uptick compared to the previous week as supportive buying sentiments prevailed in the market.
South African prices
According to sources, portside prices of RB3 (4800 NAR) coal remained stable w-o-w and are currently assessed at $66/t FOB. Similarly, RB2 (5500 NAR) remained unchanged w-o-w and are currently assessed at $82/t FOB.
Outlook
South African thermal coal import prices are expected to rise amid declining inventory at the Richards Bay Coal Terminal. However, increased domestic production might exert pressure on prices.