India: RB2 portside prices up by INR 500/t w-o-w ex-Gangavaram fuelled by surging FoB prices

The changing of months is usually a challenging time for South African coal resellers at Indian ports to arrive at an offer price, and especially when the index seems to move drastically. For instance, the API4 index towards November-end was trending at around $68/t and on 1 Dec'20, it moved up by $16/t to $84/t.

Similarly, the Indian portside prices for RB2 (5500 NAR) in November-end was assessed at INR 5,500/t, which subsequently increased to INR 6,000/t ex-Gangavaram at the start of December.

In various trade deals confirmed, about 5,000 tonnes of RB2 coal has been sold at INR 6,000/t ex-Gangavaram. Whereas, in another confirmed deal, about 10,000 tonnes RB2 coal has been sold at INR 6,200/t (ex-Paradip), INR 6,700/t (ex-Haldia). While, a deal was confirmed at Kandla port for RB1 at INR 7,000/t. All prices are exclusive of cess and GST.

CoalMint's stock at ports report reveals that there is huge volume of stock piled up at Indian ports, and it is acting as a deterrent to further rise in RB2 portside prices in line with the index upturn. The rise in API4 index is however driven by supply concerns from South Africa rather than being fuelled by any change in fundamental demand from its key importer - India.

Data with CoalMint reveals thermal coal stock at Indian port till last week stood at 17.6 mn t against 11.2 mn t around same time last year.

Qty in mn t

The sponge iron prices in Raipur is currently trading in the range of INR 25,000-25,200/t, up by INR 200/t w-o-w basis. The increase in sponge iron prices is majorly driven by rise in prices of its key raw material - iron ore.

Outlook

Although the API4 index is expected to increase in the coming days amid supply concerns in South Africa, we believe any dramatic surge in the prices seem unlikely due to sufficient stock at the ports and no significant improvement in demand.