India: South African coal prices decline further on weak demand

• Domestic coal preference continues amid geopolitical uncertainty
  
  
• Sponge iron prices fall, keeping imported coal demand under pressure
  
  

South African thermal coal prices at Indian ports declined w-o-w, as per BigMint's assessment. Ex-Paradip RB2 (5,500 NAR) fell by INR 100-200/t to INR 11,000-11,100/t, while RB3 (4,800 NAR) dropped sharply by INR 400/t to INR 9,800/t. At Vizag, RB2 declined by INR 100/t to INR 11,000/t, while RB3 eased by INR 300/t to INR 9,800/t.

Market activity remained inconsistent. While some deals were concluded around INR 11,200/t levels for RB2, buying interest stayed limited. Sellers attempted higher offers in the INR 11,700-11,800/t range, but these were largely rejected, indicating weak market acceptance. At ports, offers continued to face resistance, reflecting a clear mismatch between buyer expectations and seller pricing.

Limited trades were reported in the market, including purchases of around 2,000 t each of RB2 (5,500 NAR) at INR 10,800/t and RB3 (~5,000 NAR) at INR 10,000/t ex-Mangalore. Offers for RB2 were also heard near INR 10,900/t levels in the same region. Buyers increasingly shifted towards domestic coal, with deals reported around INR 6,700/t (39-40 FC basis), though some deliveries remained delayed due to prioritization of supply to power plants.

In some pockets, RB2 was heard offered higher, while RB3 hovered around INR 9,800-10,000/t levels. CIF offers also showed upward movement amid global uncertainty, though actual transactions remained limited.

Weak PDRI demand, partial recovery in enquiries

Demand from sponge iron markets, particularly PDRI DAP-Durgapur, weakened further, with prices declining by INR 400/t to INR 27,800/t. The correction in sponge iron and finished steel prices weighed on overall coal demand.

However, lower price levels led to a slight improvement in enquiries, with some buyers re-entering the market. Trade volumes saw partial recovery, but procurement largely remained need-based. Market participants noted that while sentiment improved marginally due to lower prices, caution persisted amid continued volatility in steel markets.

Seaborne trends remain volatile, freight supports costs

Seaborne South African coal markets remained under pressure, though volatility persisted. FOB RBCT offers for 5,500 NAR were heard around $92-94/t against bids near $89/t, while 4,800 NAR offers were in the range of $72-74/t against bids at $70-71/t.

CFR India offers for RB2 were reported around $113-115/t, while bids remained lower at $107-108/t, maintaining a wide gap. Freight levels remained firm, with east coast routes around $23-24/t, supporting higher landed costs.

Market participants highlighted that offers continued to fluctuate in line with global cues, including crude oil price movements and geopolitical developments. Some suppliers held back from reducing FOB levels below $91-92/t, indicating resistance at lower price points despite weak demand.

Inventory correction, domestic coal gains traction

Portside thermal coal inventories across India declined w-o-w in week 15, falling by 1.5% to 13.33 mnt from 13.53 mnt in the previous week, indicating a correction after recent build-ups. The decline was attributed to slower cargo arrivals and continued evacuation at select ports.

Domestic coal continued to gain preference among buyers. As per BigMint's assessment, domestic thermal coal prices increased by INR 100/t w-o-w, with 5,000 GCV at INR 6,700/t and 4,500 GCV at INR 5,300/t. Strong premiums in recent SECL auctions and steady supply availability supported domestic pricing.

Market participants indicated that large consumers increasingly shifted towards domestic coal or blended sourcing strategies, reducing reliance on imported coal amid higher costs and uncertainty in global markets.

Market insight

The market remained weak overall, with demand-side pressure, declining sponge iron prices, and continued preference for domestic coal weighing on sentiment. Despite some recovery in enquiries, buying remained cautious and largely need-based.

A persistent bid-offer gap, volatile seaborne trends, and firm freight rates continued to limit deal activity. With global uncertainties and domestic coal competitiveness intact, imported coal markets are expected to remain under pressure, with prices likely to stay volatile and slightly bearish in the near term.