India: Portside RB2 coal prices continue to rally amid South African coal index's bull run

The domestic market for South African thermal coal in India reopened this week (post Diwali holidays) on a bullish note in line with positive international cues.

The API4 index has gone up over past few days amid fear of coal scarcity as many mid and small sized mining companies in South Africa are facing bankruptcy due to limited investments. Also, the investors are coming under pressure to ditch coal due to its polluting nature and switch to greener energy.

In November, the index has gone up by 10% and is currently at $67.05/t. Subsequently, the domestic portside prices for RB2 (5500 NAR) is assessed at INR 4,900-5,000/t, ex-Gangavaram.

However, sellers have confirmed that the portside prices for thermal coal is lower by INR 100-200/t than the current index rates, which in pre-COVID times used to be sold at the same level or sometimes even higher by INR 100/t than the index.

"Domestic prices moving up is a good sign but this price increase is not driven by any change in fundamental demand. The same is rallying only due to supply concerns and rising sponge iron and pellet prices in India, and which is why portside prices are yet to touch the pre-pandemic price levels", remarked a reputed trader based in Delhi.

In various confirmed trade deals this week, about 6,000 tonne of RB2 coal has been booked at INR 4,950/t, and another 5,000 tonne has been sold at INR 5,000/t, ex-Ganagavaram. At Haldia port about 6,000 tonne of RB2 has been sold at INR 5,950/t. Prices are exclusive of cess and GST. While offers for RB1 at Kandla port is assessed at INR 5,650/t.

Stock position at ports

Thermal coal stock at Indian ports last week stood at 17.5 mn t, up by 2.1% w-o-w and by 52% from same time last year.

Thermal coal stock at key Indian ports

Qty in mn t