India: Portside South African RB2 prices rise in recent trades

It has been a month and the rally in South African API4 Index continues with December prices currently trending at $78.5/t, up by 25% against same time last month.

As the pandemic hit various countries in March, coal market was amongst the worst affected. South African coal prices touched its new lows in April at $49/t amid reduced-energy demand. While the last seven months were quite gloomy for South African coal suppliers, prices picked up from October-end on supply cuts by major miners in South Africa and few small mining firms going offline and filing for bankruptcy.

In terms of prices, the discounts for RB2 and RB3 have also been reduced amid tight supplies and are currently being heard at $8-9/t and $12-13/t respectively. Whereas, the landed cost of RB2 is around $66-67/t CFR Gangavaram for December shipment. The freight for panamax vessel between RBCT and Gangavaram port at present is at around $12/t (both east and west coast).

"South African exporters are currently holding offers in anticipation of further price rise and very few cargoes are being offered by them to India", revealed a coal trader based in Kolkata.

He further added that post China's ban on Australian coal, demand for South African coal has increased from China as it can be used for blending purpose by utilities there, giving a boost to S.African coal prices.

Domestic prices at Indian ports

Amid tight supplies and rising index, portside prices for RB2 in India has also increased by 20% m-o-m basis. In a confirmed deal, about 3,000 tonne RB2 coal has been sold for INR 5,400/t, ex-Gangavaram, while RB3 coal is being sold in the range of INR 4,300-4,400/t.

At Krishnapatnam and Paradip port RB2 coal offers are being heard at INR 5,800/t. However, no trade has been confirmed at these rates. At Haldia, the traders are anticipating a further price rise and are holding back from offering material.

Outlook

The API4 index is expected to rise further amid supply cuts by major miners and no correction is anticipated in the near future. RB2 portside prices in India is likely to follow suit and is expected to touch INR 6,000/t very shortly.