India: Limited stock, rise in import prices drive up portside RB2 prices by INR 2,000/t w-o-w
Portside prices of South African (SA) RB2 (5500 NAR) grade rebounded by INR 2,000/tonne (t) this week amid a sharp rise in South African thermal coal index, and limited c...
Portside prices of South African (SA) RB2 (5500 NAR) grade rebounded by INR 2,000/tonne (t) this week amid a sharp rise in South African thermal coal index, and limited coal stock at major ports.
Thermal coal stock at RBCT Port is assessed at a record low of 2 million tonnes (mn t).
Sponge iron manufacturers who had delayed bookings over the last few weeks in anticipation of a fall in prices, rushed to book quantities this week.
RB2 portside trade prices for the current week
| Port | Nov'21 W3 | As on 25 Nov'21 |
| Ex-Gangavaram | 10,300 | 12,300 |
| Ex-Mangalore | 10,500 | 12,300 |
| Ex-Vizag | 10,300 | 12,300 |
Prices in INR/t, ex-cess and GST
Why are South African coal prices rising?
Amid tight cargo availability in South Africa, rising gas prices in Europe, and expectation of an increase in coal demand during the winter, RB1 (6000 NAR) coal prices have risen to $161/t as on 24 Nov'21, up by $27/t w-o-w.
Domestic prices in China also have seen a modest rise as cold weather conditions prompted utilities to restock coal to cope with a potential cold snap that lasts till early December.
The discounts for RB2 and RB3 are currently assessed at $12/t and $24/t respectively for December loading. Capesize vessel freight from RBCT to Gangavaram is at $19/t.
Tight stock at major ports
Owing to limited South African coal vessels arrival at major Indian ports in the recent weeks, traders were heard holding offers.
As per CoalMint coal stock data, stockpile has been on a declining trend with the same being recorded at 1.35 mn t in Gangavaram during 14-18 Nov'21, down by 11% since end-Oct'21.
Stockpile at Mangalore, and Paradip have also fallen to 0.34 mn t and 0.36 mn t, respectively.
Sluggish demand for sponge iron had compelled manufacturers to adopt a wait-and-watch mode over the last two weeks. However, with the rise in prices, several units rushed to secure small quantities in fear of a further rise in prices in the coming days.
Several sponge iron manufacturers were even heard bidding for the domestic coal auction conducted by SECL on 24 Nov'21, wherein 0.53 mn t was put up for sale.
The company will carry out another set of spot auction for sale of 0.8 mn t coal on 26 Nov'21.
As per CoalMint's vessel line-up data, a total of 0.72 mn t of vessels are scheduled to arrive from South Africa between 25 Nov'21-1 Dec'21.
Short-term outlook
CoalMint believes, imported prices are likely to remain elevated with rising restocking demand for winters. Tight cargo availability in South Africa may also keep portside prices higher in the upcoming months.
