India: South African coal portside trade subdued on bid-offer disparity, higher port stocks

• Thermal coal inventories at Indian ports inch up w-o-w
  
  
• Sponge iron prices drop in major markets
  
  

South African thermal coal trade at Indian ports remained subdued during the week as weak sponge iron demand, comfortable domestic coal availability and cautious industrial procurement continued weighing on market activity. Market participants reported very limited enquiries, with buyers largely avoiding imported coal due to elevated offer levels and increasingly preferring domestic alternatives.

Portside prices showed mixed trends. As per market indications, ex-Paradip RB2 (5,500 NAR) remained stable w-o-w at around INR 11,350/t, while RB3 (4,800 NAR) increased marginally by INR 50/t to INR 9,850/t. At Vizag, RB2 prices declined by around INR 300/t w-o-w to INR 10,900/t, while RB3 remained stable at INR 9,800/t.

Thermal coal inventories at Indian ports edge up

India's thermal coal inventories at major ports increased marginally by 0.6% w-o-w to 15.61 mnt in week 22 from 15.53 mnt in week 21, indicating continued comfortable supply conditions despite mixed evacuation trends across ports. Among major stockholders, Adani Enterprise's inventory increased 3% w-o-w to 4.03 mnt, reinforcing its position as the largest inventory holder. In contrast, Agarwal Coal's stock declined 7.2% to 0.74 mnt, reflecting steady cargo movement and selective replenishment.

Weak demand keeps market quiet

Participants stated that demand remained extremely weak across major consuming regions. Buyers continued focusing on domestic coal due to lower prices and improved availability, while imported coal offers remained largely unworkable amid declining sponge iron prices and weak finished steel demand.

Several traders indicated that cargoes currently available at ports had replacement costs closer to INR 11,700/t, resulting in losses at current market levels. Despite sellers lowering offers to attract buyers, enquiries remained scarce and fresh trade activity was almost absent.

At Haldia, RB2 offers were last heard near INR 12,000/t, although market participants reported no meaningful buying interest. Traders also noted that no major South African cargo arrivals were currently expected, reflecting the weak demand environment.

Domestic coal remains competitive

Domestic coal continued exerting pressure on imported cargoes. BigMint assessed 5,000 GCV coal stable at INR 5,500/t, while 4,500 GCV coal remained stable at INR 4,050/t. Improved grade availability and regular auctions continued supporting domestic supply.

Market participants noted that recent SECL auctions witnessed flat bidding sentiment, with some material remaining unsold. However, NCL auctions attracted relatively stronger premiums. Washed coal offers were heard around INR 5,500/t ex-plant, although demand remained limited.

Sponge iron decline impacts coal demand

Weak downstream steel demand continued weighing on coal consumption. PDRI DAP-Durgapur prices declined by INR 200/t w-o-w to INR 23,650/t, reflecting subdued buying activity and cautious sentiment across the steel value chain.

Participants stated that procurement remained largely need-based, while expectations of slower activity during the monsoon season further reduced buying interest. Many traders expect the market to remain sluggish over the next few months as industrial demand softens seasonally.

Outlook

South African coal sentiment is expected to remain weak in the near term amid poor downstream demand, wider bid-offer disparities and strong competition from domestic coal. However, market participants indicated that the planned seven-day maintenance shutdown at RBCT and firmer FOB levels of around $101-103/t for 5,500 NAR and $81-83/t for 4,800 NAR may support higher offers going forward if supply tightens.