- Indian sponge iron prices fall on slack demand
- SA FoB prices ease on partial Transnet resumption
Prices of RB2 (5500 GAR) coal in the Asian thermal coal market picked up slightly w-o-w to INR 10,000/tonne (t) ex- Vizag amid deals concluded at higher levels. This was in anticipation of material constraints expected from train derailment in South Africa.
On 18 May, a train derailment occurred at Vreihed, South Africa, resulting in the closure of both rail lines on the route, according to a statement from Transnet Freight Rail OCC Tactical Volume Planning on the same day. Transnet Freight Rail operates as the main logistics provider for South African exports.
Declining prices and reduced demand from the European market have enabled price-sensitive buyers like India to increase their purchases of South African thermal coal.
South African freight operator Transnet Rail Freight announced the partial resumption of services at Vreihed on 21 May. Following the train derailment on 18 May, one of the two affected rail lines, Line 2, resumed operations safely at noon on 21 May. However, Transnet has not provided an estimated time for the return of services on Line 1, as work remains to be completed. The disruption was expected to bring in supply crunch. However, the announced resumption and not very aggressive buying interest have kept prices under pressure.
Prices of RB3 (4800 NAR) coal at Vizag Port were recorded at INR 8,400/t, unchanged w-o-w.
Deals this week
- According to market participants, an RB2 coal deal was done for 3,000 t at INR 10,100/t at Paradip Port this week
- Another deal for 5,000 t of RB2 coal was heard at INR 10,000/t ex-Vizag Port.
- A deal was heard to have been concluded for 5000 t of RB2 at INR 10,100/t ex-Vizag Port towards the beginning of the week.
Factors impacting South African coal prices
South African prices at portside: Portside prices of RB3 (4800 NAR) coal have dropped slightly w-o-w and are currently assessed at $79/t, FoB levels. Similarly, RB2 (5500 NAR) coal prices have fallen by $3/t w-o-w at $92/t FoB.
South African exports fall marginally in April: South Africa’s thermal coal exports fell by 2% m-o-m to 5.27 million tonnes (mnt) in April as against 5.36 mnt in March. However, exports dropped by 6% y-o-y to 5.27 mnt in April compared to 5.60 mnt in April 2023. India was the leading buyer of South African coal at 2.59 mnt in April 2024, up 11% m-o-m as against 2.33 mnt in March.
As per data maintained with BigMint, South African coal exports for the month till 21 May are at around 2.08 mnt. About 1.01 mnt of coal are further expected by the country in May.
Sponge iron prices fall this week
Sponge iron (P-DRI) prices fell by INR 700/t w-o-w to INR 28,900/t exw Raipur on 24 May.
Prices fell on dearth of buying enquiries in the spot market. As a result, suppliers in various regions of the country reduced their offers.
Outlook
Imported South African coal prices may remain range-bound on limited enquiries and low buying from the sponge players. However, some restocking by traders may increase the bid levels at ports.