South African thermal coal gains popularity in India amid cheaper prices

. The coal export price of South Africa slumped about 27% to trade at $94.17 in January 2024 from $129 in October 2023.

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26 Aug, 2025 12:21

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India’s appetite for South African-origin thermal coal has increased over the past few months due to discounts and attractive prices offered by Richards Bay traders, prompting cost-conscious buyers to pivot away from Russian coal, according to analysts and experts.

The ongoing Red Sea crisis disrupted South Africa's coal supply to Europe, prompting traders to sell the material at discounted rates to India, where demand for thermal coal has grown significantly due to higher power demand and industrial activities.

"For the past 1.5 months, we are noticing an uptick in discount activity from South African sellers and inquiries have reduced for Russian coal," said an importer from Haldia.

The price of coal exported from South Africa slumped 27 percent to $94.17 per metric tonne on January 31 from $129.47 on October 31.

While South Africa has been among the top three coal suppliers to India, it lost some ground to discounted Russian coal shipments in 2022 following Moscow's invasion of Ukraine, analytics firm S&P said.

The drop in South African coal prices towards the end of last year pushed up its thermal coal imports to India, which surged 74 percent to 4.7 million metric tonnes in November-December from a year ago, according to S&P data.

However, coal shipments from South Africa dropped 3 percent in January, according to market research firm Coalmint, as buyers waited for a further reduction in prices. Meanwhile, an uptick in thermal coal production by Coal India Ltd. is helping to keep stocks sufficient for domestic consumers.

"Although there has been a slight uptick in Indian buyers' interest in South African-origin coal lately, driven by attractive prices and increased inquiries from industries like cement and steel, the overall demand for India's thermal coal at the spot market has remained sluggish. This is primarily due to the presence of a sufficient level of domestic stocks," SteelMint said in a report earlier this week.

The drop in coal prices will likely reduce fuel costs for cement producers. Earlier this month, Shree Cement senior advisor Ashok Bhandari flagged that the effect of discounted South African coal will play out in Q4, bringing down its fuel costs.