India: Portside RB2 coal prices range-bound amid volatile international market

Portside prices of South African (SA) RB2 (5500 NAR) grade coal remained range-bound between INR 10,100-10,600/t at Gangavaram Port this week. This was in line with the minor fluctuations seen in RB1 (6000 NAR) import prices - by $130-135/t, FOB basis.

The fluctuations in imported prices came against the backdrop of reduced winter restocking activity in China and other Asian markets, coupled with limited stock of 2.5 mn t at Richards Bay Coal Terminal (RBCT).

The discounts for RB2 and RB3 were assessed at $13/t and $25/t respectively for December loading.

RB2 portside trade prices

Prices in INR/t, ex-cess and GST

Limited stock at ports support prices

Despite the fluctuations in imported coal prices and increased domestic availability, portside RB2 prices remained supported due to limited stock at major Indian ports.

Thermal coal stock at Gangavaram, the key port for South African coal trade, continues to remain under pressure and has been on a declining trajectory since early Oct'21.

As per CoalMint data, thermal coal stock at the port stood at 1.21 million tonne (mn t) in week 49 ( 28 Nov-2 Dec'21), down 12% w-o-w. Overall stocks at ports were assessed at 13.8 mn t, down 2% w-o-w.

Vessel arrival from South Africa also remains under stress as a total of 0.42 mn t is scheduled to arrive at Indian ports between 12-24 Dec'21, CoalMint data showed.

Improved domestic supplies

Amid a sharp rise in CIL's coal output last month, supplies seem to be improving even for the non-power sector, including sponge iron, as coal dispatches by CIL and its subsidiaries to the sector had risen by 43% m-o-m to 0.63 mn t in Nov'21, company data showed.

Few sponge iron units were even heard to have opted for domestic coal purchases over imported as the former is cheaper than portside prices by INR 3,000-4,000/t.

Portside trade deals concluded

Several sponge iron units booked RB2 coal in limited quantities this week amid expectation of a further fall in prices going ahead.

In various confirmed deals collected by CoalMint between 6-10 Dec'21, a total of 50,000 t of RB2 was traded at an average price of INR 10,300/t, ex-Gangavaram.

Short-term outlook

CoalMint believes, portside RB2 prices are likely to remain in a tight range replicating the ongoing volatility in the international market. However, lower vessel arrival from South Africa and subsequent limited stock at ports are likely to limit any major fall in portside prices.