South African RB2 (5500 NAR) portside prices inched down further by an additional INR 200/t (w-o-w) as inquiries from Indian sponge buyers turned thin. Currently the prices are being assessed at INR 5,500/t ex-Gangavaram (exclusive of cess and GST).
Stock data maintained with CoalMint reveals that thermal coal stock at Gangavaram port stood at 2.91 mn t towards the end of last week with a marginal decline of 0.7% w-o-w basis.
Piled-up inventory, increased domestic availability and uncertainty in sponge prices are the key factors discouraging sponge buyers and they are delaying their coal purchase, market participants informed CoalMint.
“Sponge sector buyers of South African coal are not making any significant bookings as they are waiting for clarity in sponge and steel prices that have been falling over past few days”, quoted a trader based in Raipur.
He further added that there is no urgency for buying raw material at present as they had stocked up coal when prices were rallying in December in anticipation that it would escalate further.
Supply tightness from South Africa
On the supply side, South Africa’s RBCT port had been shut for almost 20 days in January for maintenance work. This coupled with heavy rains across North-eastern part of the country has resulted in very tight supplies of thermal coal from the country.
In fact, trade sources informed CoalMint that South African coal sellers are currently prioritising Chinese market over India due to high demand there resulting in very limited offers for Indian market. Also, there is increased booking for 4800 GAR coal from India which is being used by power sector given the rise in Indonesian coal prices.
However, this trend of South African sellers focusing on Chinese market won’t last long as the country is going for Lunar New Year Holidays and the inquiries from the China would gradually subside in the coming days.
Outlook
Taking into consideration all the factors, CoalMint believes that South African API4 index would see some correction in February once the supply situation eases. In case of portside prices also the same is expected to remain more or less stable as the trades would cautious ahead of the Union Budget which is to be announced on 1 Feb’21.
Leave a Reply