India: Volatile imported prices keep RB2 coal portside trade range bound

Portside prices of South African (SA) RB2 (5500 NAR) grade remained largely unchanged this week amid volatile imported coal prices.

Prices at Gangavaram Port rebounded by INR 1,500/tonne (t) for a brief period earlier this week, before going down to INR 11,500/t as on 11 Nov'21.

However, enquiries from sponge iron manufacturers continued to remain limited as they resisted making any major bookings in anticipation of prices falling further in the upcoming days.

RB2 portside trade prices for the current week

Prices in INR/t, ex-cess and GST

Amid limited operations due to the Diwali festival, sponge iron manufacturers postponed any major bookings over the last two weeks and largely adopted a wait-and-watch mode.

Enquiries were largely restricted in a downward territory, resulting in lower sales. Traders, on the other hand, averted selling stock at loss due to limited portside stock.

Owing to the changing dynamics of portside trade, a few large sponge iron plants also opted for direct imports, informed market participants.

Meanwhile, domestic supply situation in the country also improved steadily with Coal India's production rising sharply by 23% m-o-m to 50 million tonnes (mn t) in Oct'21, while its dispatches were at 57 mn t, up 17% m-o-m.

Portside deals concluded

In various confirmed deals collected by CoalMint between 8-11 Nov'21, a total quantity of 27,000 t of RB2 coal has been traded at an average price of INR 12,500/t, ex-Gangavaram this week.

Imported South African prices fluctuate

Over the last two weeks, South African RB1 (6000 NAR) grade coal prices for November rose to $149/t, before easing to $140/t as on 10 Nov'21.

The decline in global thermal coal prices has been in tandem with the sharp fall in prices in China.

The discounts for RB2 and RB3 are currently assessed at $13/t and $25/t respectively for November loading cargo. Capesize vessel freight from RBCT to Gangavaram fell slightly to $21/t.

Short-term outlook

CoalMint believes, portside South African coal prices are likely to remain in a tight range in the upcoming week amid the declining trajectory of the South African coal index and the improving domestic coal supply in India.