India: Limited portside stock lifts South African RB2 prices by INR 700/t w-o-w

Portside prices for South African RB2 (5500 NAR) grade coal rose by INR 700/tonne (t) this week amidst persistently lower stocks at major ports.

Strong demand from sponge iron manufacturers even compelled them to procure more of RB3 (4800 NAR) coal this week besides having booked RB2 for arrivals in the upcoming weeks.

With very limited ready stock at Gangavaram and Vizag ports, traders were also offering RB2 coal at INR 12,700/t for Feb'22 shipment.

Stock levels at Gangavaram Port fell sharply to 0.88 mn t between 02-06 Jan'22, down 6% w-o-w. Thermal coal stock at the port have been on a declining trajectory since Sept'21, CoalMint data showed.

Vessel arrival from South Africa also remained under pressure as a total of 0.8 mn t of coal from the country is set to arrive at Indian ports between 12-21 Jan'22, as per CoalMint data.

Several sponge iron manufacturers also were heard booking direct cargoes from South Africa, resulting in reduced portside trading.

RB2 portside prices this week

Prices in INR/t, ex-cess and GST

Imported prices remain elevated

RB1 (6000 NAR) grade coal prices continued to remain elevated at $159/t FOB as on 12 Jan'22, up by $3/t w-o-w.

An acute coal shortage at Richards Bay Port Terminal in South Africa continued to keep its prices higher as coal stock was estimated at a multi-year low of 1.9 mn t.

Limited supply from Indonesia surrounding the coal export ban further supported prices as several importing countries including China looked for an alternative.

China's imports of South African coal rose sharply to 6.9 mn t in CY'21 as traders tried to fill the supply gap created following the government's ban on Australian coal imports in the latter half of 2020.

The discounts for RB2 and RB3 were assessed at $8/t and $17/t respectively for Jan-loading cargoes.

Short-term outlook

CoalMint believes portside RB2 prices are likely to remain supported amidst limited vessel arrivals from South Africa in the coming weeks and also due to concerns over global coal supply in the near term.