India: South African RB2 portside coal prices remain weak on high stock at ports

The portside prices of South African RB2 (5500 NAR kcal/kg) thermal coal especially at Gangavaram port are not improving despite the index moving up from start of November.

The flat portside prices can be attributed to higher thermal coal stock at ports and no change in fundamental demand especially from the sponge iron sector.

The data maintained with CoalMint reveals that noncoking coal stock at Indian ports have moved up by 1.45% w-o-w basis to 16.2 mn t, while at Gangavaram port it is up by 2% w-o-w to 2.65 mn t.

As the API4 index is presently trending higher at around $60-61/t, traders have raised their RB2 portside offers to INR 4,550-4,650/t (ex-Gangavaram). However, buyers are reluctant to accept the hiked offers and are negotiating to buy at INR 4,400-4,500/t.

“There is sufficient stock at port and while the old stock for RB2 is available at INR 4,400-4,450/t, the newly procured coal is being offered at around INR 4,650/t, which is still lower than the actual landed cost of coal – resulting in losses for us”, remarked a trader based in Kolkata.

In case of other ports in the east-coast like Haldia and Krishnapatnam, coal prices remain unchanged w-o-w basis as recent deals have been concluded at INR 5,450/t and INR 4,750/t respectively. In the west coast, RB1 prices are assessed at INR 5,400/t.

Stock surge at Krishnapatnam port

Thermal coal stock at Krishnapatnam port has increased by 9.15% w-o-w to 1.35 mn t. Adani Enterprise’s coal stock surged by 70% w-o-w to 0.36 mn t as the port has been taken over by the trading house, according to sources.

Thermal coal stock at Indian ports

Outlook ahead

Although the sponge iron prices are moving up (currently at INR 22,000-22,300/t) amid rising pellet offers, any dramatic push to portside thermal coal prices looks grim because of sufficient stock availability at Indian ports and rising selling pressure on the traders to liquidate stocks.