India: South African thermal coal portside prices remain unchanged on tepid demand

In the Asian thermal coal market, prices remained stable amid buyers' resistance over current price levels and tepid demand from major consumers due to healthy stocks at ports. Prices for RB2 (5500 NAR) coal at Vizag Port were assessed at INR 9,500/t.

Market participants reported a lack of buyer activity in purchasing South African coal, driven by expectations of further price drops due to subdued demand. The demand had remained unchanged from the previous week, characterised by reduced industrial activity, leading to a decline in consumption and limited trading.
Market participants noted a restrained market, indicating buyer hesitancy as they anticipated more favourable pricing conditions.

December is usually the month with the lowest trade volumes, and spot activity in the physical thermal coal market, experiencing a notable slowdown as well. Imported vessels for RB3 (4800 GAR) also remained on the lower side.

India was the largest buyer of South African coal at 2.34 mnt in November 2023, down by 4% m-o-m as against 2.43 mnt in October, 2023.

Sponge iron prices

Sponge iron prices dropped by INR 100/t w-o-w to INR 26,700/t exw Raipur on 22 December, 2023. The price drop was also influenced by a considerable reduction in steel prices in north India, which resulted in subdued spot purchases. According to market participants, need-based inquiries were made, as the majority of participants opted to stay on the sidelines.

South African prices

As per sources, portside prices of RB3 (4800 NAR) coal remained stable w-o-w and are currently assessed at $76/t FOB. Similarly, RB2 (5500 NAR) prices remained unchanged w-o-w and are currently assessed at $93/t FOB.

Outlook

South African thermal coal prices are anticipated to witness downward trend going forward amid rise in domestic production and buyer resistance at current price levels. Additionally, sellers, facing a cautious market, are making efforts to offload stocks at levels below the index, leading to depressed profit margins.