India: Portside RB2 prices up further on supply woes; trade volumes lower

Portside prices of South African RB2 (5500 NAR grade) coal rose to INR 12,000-12,200/t levels this week amid an acute imported coal shortage at major ports.

Limited vessel arrival from South Africa in the ongoing week also supported the rise in prices as major supply from the country are set to arrive only by the first week of Jan'22.

As per CoalMint vessel line-up data, a total of 0.35 mn t of South African coal is set to arrive at various Indian ports between 30 Dec'21-5 Jan'22.

RB2 portside prices this week

Prices in INR/t, ex-cess and GST

Portside trading activity also turned sporadic on the heels of reduced stock at ports. Sellers were heard to be holding their limited stocks in anticipation of further price rise post-New Year holidays.

Domestic coal booked at premium

Apart from the recent rise in imported prices especially of high-CV South African coal, domestic coal is being booked at a higher premium in auctions held in the recent past.

G7 (5200-5500 GCV) grade coal at SECL's exclusive auction held during Dec'21 was booked at INR 3,629/t, fetching a premium of 30% over the reserve price.

The rise in domestic coal prices comes against the backdrop of the fact that majority of domestic coal offerings are still being directed to the power sector, leaving the non-power units hungry for coal.

In the Dec'21 special forward auction conducted by SECL, a total of 1 mn t of coal was directed towards the power sector whereas only 300,000 t was offered to the non-power companies.

The next round of spot auction for 0.6 mn t is scheduled to take place on 31 Dec'21 wherein end-users, as well as traders, are expected to participate.

"With traders participating in the auction, there is an expectation of domestic prices rising further," a Raipur-based trader said.

South African coal prices stable

RB1 (6000 NAR grade) coal prices were assessed at $121/t for Jan'22 amid lower trading volumes.

Cargo availability continued to remain under pressure from South Africa due to logistic disruptions.

The discounts for RB2 and RB3 were assessed at $12/t and $21/t respectively for January-loading.

Short-term outlook

CoalMint believes, portside RB2 prices are likely to remain higher amidst limited vessel arrival from South Africa in the upcoming weeks.