India: RB2 grade coal portside offers rise but buyers show resistance

South African thermal coal index (API4) which had been hovering around $59-59.5/t in last week of October, moved up by $1/t for November. However, portside prices for RB2 (5500 kcal/kg NAR) coal at Gangavaram port remains flat.

Market sources have informed CoalMint that while sellers at Gangavaram port have subsequently raised their offers by INR 200/t to INR 4,600/t (exclusive of cess and GST), buyers are quite rigid to accept the revised offers and are showing buying interest at the levels of INR 4,400-4,450/t.

In fact, some buyers are of the opinion that amid sufficient stock of thermal coal (15.9 mn t as on 22 Oct) and limited demand due to the festive season, RB2 coal should be made available at INR 4,300/t (ex-Gangavaram).

The bearish sentiments in portside trade are further fuelled by the increased availability of domestic coal. Coal India's subsidiaries (SECL and NCL) have put up a total quantity of 3.60 mn t of domestic coal for auction especially for importers.

In a confirmed deal concluded this week, about 5,000 tonne of RB2 coal has been sold at INR 4,475/t (ex-Gangavaram). While any new trade at increased offers of INR 4,600/t is yet to materialize.

In case of other major ports, RB2 prices are assessed at INR 4,750-4,800/t (ex-Krishnapatnam), INR 4,800/t (ex-Paradip) and INR 5,450/t (ex-Haldia). Prices are exclusive of cess and GST.

Imported coal market update

Indian demand for South African thermal coal remains dull as most buyers have already made bookings for November and demand in India is expected to remain flat during the upcoming Diwali festival holidays.

• Currently, RB2 prices are assessed at $57-58/t and RB3 price is at $43-44/t, CFR India (east coast) basis.
  
  
• The discounts for RB2 are at $10-11/t whereas that for RB3 (4800 kcal/kg NAR) are at $19-20/t.
  
  
• The average freight between RBCT and Indian ports (both east and west) are assessed at USD 12/t.
  
  

Outlook

We believe that amid increased availability of domestic coal, sufficient stock and coupled with lacklustre demand due to Diwali festival, any significant increase in South African thermal coal portside prices seems unlikely in the near term.