Coal Price Trend: Domestic Shift Amid Slow Demand

In the Asian thermal coal market, prices at Gangavaram Port for RB3 (4800 NAR) coal remained steady at Rs.7,400 with a slight monthly drop from Rs.8,200 in January 2024. Despite a recent uptick in interest for South African coal among Indian buyers due to attractive prices, overall demand in the spot market remains slow, primarily attributed to sufficient domestic coal stocks. Let’s delve into this article to see the impact and deep analysis.

Domestic Preference Impact

Transactions persist as buyers who typically relied on seaborne supplies now show a preference for domestic coal. A shift towards domestic supplies is evident, signalling an improvement in demand.

South African Exports Dip

South African coal exports to India decreased by 39% in January, reaching 1.92 mnt compared to 3.17 million tons in December 2023. Buying activity for South African coal remained limited due to expectations of further price drops amid subdued demand, creating a cautious atmosphere among market participants.

Stability in South African Prices

In February 2024, Portside prices for South African RB3 (4800 NAR) coal and RB2 (5500 NAR) coal remained stable at Rs.7400/ton and Rs.8600/ton, respectively, indicating a steady market condition.

OFB’s Insight

The outlook for South African thermal coal import prices suggests a likelihood of remaining range-bound or experiencing a decline. Market participants are adopting a cautious approach, considering the ample coal stock available at Indian ports. Despite this, a slight improvement in demand observed recently may contribute to maintaining stable prices within the market.