Infographic: What’s driving India’s South African coal import decisions?

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South Africa’s Richards Bay Coal Terminal (RCBT) exports to India rose by over 3.5mn on the year and made up over 60% of total exports. Understand the factors behind demand, and how competitive different coal grades have been, with this infographic.

Infographic: What’s driving India’s South African coal import decisions?

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What’s driving India’s South African coal import decisions?

Exports to India from South Africa’s Richards Bay Coal Terminal (RCBT) rose by over 3.5mn t on the year to 21.4mn t in January-June 2019. 

India accounted for over 60pc of RCBT’s January-June exports, up by 9 percentage points on the year. Pakistan came second, with 14pc, and northeast Asia accounted for 7pc.

So, why did Indian buying interest in high-grade South African coals pick up?

South African supplies have priced competitively against other origins. For instance, in January-August, Richard Bay NAR 6,000 material averaged $113/t, down by 22pc on the year, while the US NAPP averaged $142/t, up by 3pc year.

For NAR 5,500 kcal/kg, South African prices fell by 23pc to an average of $98/t, while Australian coal averaged $103/t, down by 18pc, and Indonesian coal averaged $106/t, down by 14pc.

Demand from India is driven by the industrial sector, including sponge iron firms that prefer NAR 5,500 for its fixed carbon content of 52pc. It is estimated that this sector receives 25mn t/yr of seaborne thermal coal imports.

However, as prices shift, different grades have become more attractive.

In April-June, NAR 5,700 prices fell below those for NAR 5,500, reflecting slower demand from Europe and northeast Asia.

And by the end of May, NAR 4,800 had also become less competitive, due to stronger interest from the South African domestic market.

Will demand pick up after monsoon season?

Typically, industrial activity slows during the June-September monsoon season. This year, funding problems and a cash shortage could continue to curtail industrial output and fuel demand. Indian economic growth slowed to 5pc in April-June this year. Moreover, some sponge iron firms have cut production in response to squeezed margins.

These changes mean it’s important to stay informed about changing price trends.

Argus now assesses three off-specification Richards Bay prices — NAR 5,700, NAR 5,500 and NAR 4,800 — to enable market participants to identify the most competitive import grades

These prices are published as part of Coal Daily International. Request a sample report here.

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