India: Portside RB2 prices range-bound amidst sluggish buying interest

Portside South African coal prices remained range-bound this week with trades being heard at INR 15,400/t at Gangavaram Port, up by INR 200-300/t w-o-w basis.

Despite limited stock at Indian ports, prices did not see a sharp rise due to a marginal fall seen in the last week, making sponge iron manufacturers adopt a wait-and-watch mode.

With the removal of the export ban on Indonesian coal, buyers of South African coal are anticipating that global prices may see a drop in the latter half of Feb'22.

"Next week prices may go up once Chinese players are back in the market post-the spring festival holidays but may see some correction thereafter as winter procurement is over and Australian supplies may also improve as rainfalls have reduced," said a market participant based in Delhi.

Majority of sponge players this week were purchasing RB2 coal in small quantities as per their requirements and avoiding bulk purchases.

"Given the tight supply conditions at ports, RB2 prices could have easily reached the highs seen in Oct'21. However, procurement demand from sponge players was weak due to their inability to pass on the rising raw material costs to the end-users," a Raipur-based trader said.

RB2 portside prices this week

Prices in INR/t, ex-cess and GST

Sponge iron units eye domestic supply

Several sponge players were heard rushing to secure domestic supplies as evident from the aggressive bidding seen in the recent coal auction conducted by CIL subsidiary, South Eastern Coalfields Ltd (SECL).

In the recently held spot auction, highest grade of domestic coal offered was booked at a premium as high as 136% over the reserve price.

RB2 continues to be sold at premium

RB1 (6000 NAR) grade prices for the current week were assessed at $176/t, FOB down by $5/t w-o-w, but up by $37/t m-o-m. The w-o-w fall in prices could be because of the export ban removal on Indonesian coal.

However, the coal supplies from the country continued to remain constrained with no improvement in stock levels at RBCT Port which are hovering at 1.9 mnt since the last two months.

The coal shortage at RBCT Port led to RB2 being offered at a premium of $5/t against $2/t last week while the discount on RB3 (4800 NAR) is assessed at $5/t.

Short-term outlook

CoalMint believes portside RB2 prices are likely to remain elevated due to tight stock and limited vessel arrivals from South Africa in the coming weeks. Rising natural gas prices and reduced stock at RBCT Port may continue to support imported prices.