India: Heavy rainfall leads to limited trade and flat prices of RB2 grade coal at Gangavaram port

Heavy rains lashed the eastern parts of India last week and has taken a toll on domestic thermal coal trade especially at Ganagavaram port. The torrential downpour in last ten days have been a spoilsport for the portside trade that had gained momentum at the start of October.

"There was no loading-unloading work at Ganagavaram port last week as the material there almost drowned. We have resumed our work since Monday but demand is quite flat because of high moisture in the material at present", quoted a trader doing business at Ganagavram port.

However, with a clear weather forecast for next two days, trade at Ganagavaram port is anticipated to pick up, but most market paricipants expect a festival lull is expected in the market till Dussehra.

According to information on various trade deals gathered by CoalMint, the average selling price for RB2 coal at Gangavaram port on 8-9 October (before rains started) was around INR 4600-4650/t, which has now fallen down to around INR 4,400-4,500/t. Prices are exclusive of cess and GST.

Buyers' sentiments

The buyers from cement industry are currently opting for high CV Australian coal given its low prices amid distressed selling by the Australian and Chinese sellers. This is adversely impacting the portside trade for South African coal.

In case of the sponge iron sector, although the demand has picked up compared to previous months, it has still not reached the pre-pandemic levels. Also, due to sufficient thermal coal stock of 15.4 mn t (as on 15 Oct) at Indian ports, which was around 11.3 mn t same time last year, the S.African coal market in India has become a buyers' market.

Portside prices for RB2 gets support at Haldia port

Portside prices for RB2 at Haldia port has not fallen in proportion to the price drop at Gangavaram and other major ports owing to increased inquiries for thermal coal especially from Nepal and several other factors like higher waiting period (around 8-9 days) at the port, limited stock available and no major quantity coming to the port in the near-term.

Data maintained with CoalMint reveals that 85,000 tonne thermal coal (booked by Rungta Mines and Shyam Group) is coming to Haldia port by 26 October. Whereas, as on 15 Oct'20 thermal coal stock at Haldia port stood at 0.22 mn t. Around same time last year the stock at Haldia port stood at around 1.20 mn t.

Portside offers at Indian ports

RB1 price ex-Kandla at around INR 5,400/t.
RB3 price ex-Gangavaram at around INR 3,700/t.

Prices are exclusive of cess and GST.

Near-term Outlook

Market experts anticipate that portside thermal coal prices in India would pick up only post Diwali festival in mid-November as the onset of the dry season will culminate in resumption of various industrial and construction activities, subsequently leading to increased coal demand. However, we expect the market to remain relatively calm for the remainder of October.