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.
In the Indian market, buyers exercised caution, expecting potential price reductions due to lack of interest in seaborne thermal coal. Although there were inquiries for mid-CV coal from the sponge-iron industries, the overall demand remained subdued. 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.
Despite this, interest persisted for RB2 (5500 NAR) in the market, however, demand for RB3 (4800 NAR) continued to remain subdued. Imported vessels for RB3 remained on 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.
Sponge iron prices
Sponge iron prices rose by INR 500/t w-o-w to INR 27,050/t exw Raipur on 8 December 2023. Prices continued to rise amid escalating steel prices followed by the buying interest among participants which remained active throughout the week. Active bookings have been seen across regions.
Transnet expands rail capacity to combat export drop
Transnet, South Africa’s state-owned rail and ports firm, plans to boost coal export capacity by adding 14 extra trains weekly from December-March 2024. This addresses transport challenges caused by insufficient rail capacity. From January-October 2023, Transnet transported 39.43 mnt of coal to RBCT, reflecting an annual run rate of 47.44 mnt which is below last year’s 50.35 mnt, marking a 30-year low, attributed to cable theft and infrastructure vandalism disrupting bulk commodity transportation.
South African prices
As per sources, portside prices of RB3 (4800 NAR) coal remained largely stable w-o-w and are currently assessed at $82/t FOB. Similarly, RB2 (5500 NAR) prices remained unchanged w-o-w and are currently assessed at $95/t FOB.
Outlook
The South African thermal coal prices are anticipated to witness downward trend going forward amid rise in domestic production and buyer resistance to current levels. Yet, scarcity of low-CV material and Transnet’s capacity expansion may exert upward price pressure.
