India: RB2 portside prices spurt INR 500/t on improved demand

The demand for portside South African thermal coal picked up this week as sponge iron units resorted to procuring imported coal. This led to a rise in prices across major ports by INR-300-500/t on a w-o-w basis.

RB2 coal portside trade prices

*Prices in INR/tonne, ex-cess and GST

RB2 offers at Haldia rose to INR 10,200/t amid limited stocks at the port, while offers in Paradip rose to INR 9,500/t. Offers at Gangavaram and Vizag ports rose to INR 9,300-9,500/t as on 12 Aug'21.

Few direct importers were, however, heard to be holding back their offers amid expectation of further prices rise in the upcoming days.

Market participants informed that the landed cost of RB2 coal at current imported prices of $122-123/t CNF India are coming to around INR 10,700/t (including cess and GST) and that they are still offering the same at comparatively lower levels of INR 9,300-9,500/t which is why they are holding back their offers.

Improved demand brings buyers back into market

Sponge iron manufacturers who held their bids for almost a month on expectations of a correction in South African coal prices, rushed in to procure considerable quantities of imported coal this week as billets demand picked up and imported coal prices moved up further.

The domestic demand for billets picked up recently which led to a price rise of INR 1,000/t w-o-w whereas sponge iron prices also moved up INR 300/t and are currently assessed at INR 33,300/t ex-Raipur.

In addition to this, mining major NMDC (Chhattisgarh) also cut its iron ore lumps prices by INR 350/t m-o-m for Aug'21 giving some respite to sponge iron manufacturers who were struggling with elevated raw material prices.

While domestic coal has found increased usage in the sponge iron sector since the past few months due to the cost advantage, supply of the same is being hampered because of heavy rains in mining areas of West Bengal, Odisha and Chhattisgarh.

South African imported coal prices up further

The South African RB1 (6,000 NAR) grade coal price continued to rise to touch $136.9/t as on 11 Aug'21, up 2% w-o-w.

The discounts for RB2 and RB3 this week are assessed at $18-19/t and $26-27/t respectively for Aug'21-loading cargo, while capesize vessel freight between RBCT to Gangavaram is at $18/t.

Short-term outlook

CoalMint believes South African thermal coal portside prices are likely to remain elevated in the near term amid higher imported South African coal prices, limited availability of stock at ports and on expectations of demand pick-up post-monsoon from September.