India: RB2 grade thermal coal stock and sale offers inch down amid sluggish demand

Key Highlights

—Stock and sale offers for RB2 (5500 kcal/kg) grade thermal coal at Indian ports have moved down by INR500-100/t w-o-w basis.

—The current offers at Gangavaram port are heard at INR 4,500-4,600/t, Krishnapatnam port at around INR 4,700/t and Haldia port at INR 5,300-5,400/t.

—The key reason for price drop is lacklustre demand from sponge iron and cement sector both.

“While demand from power sector is slowly picking up, there is not significant uptick in demand from cement and sponge iron sector in India. However, we are hoping that demand for coal would pickup in last quarter of 2020 as post monsoon, seasonal companies resume their operations”, quoted a market participant based in Delhi.

—While pellet and iron ore prices are experiencing rally, domestic sponge iron prices in India have remained stable w-o-w with minor fluctuations.

—Subsequently the increase in raw material cost is unable to push up sponge iron prices indicating lack of demand from end-user segment.

Imported coal at CFR India basis for Sep-Oct shipments

The freight for capsize vessel has remained unchanged this week and is reported to be at $12.5/t in east coast of India.

Outlook

Market participants are of the opinion that amid increased availability of domestic coal and rising competition from cheaper Australian thermal coal any support to imported coal and stock and sale offers is unlikely in the coming week.