The South African coal RB2 (5500 NAR kcal/kg) portside prices at Gangavaram has observed some recovery by mid-week with prices moving up by INR 250-300/t w-o-w basis.
While the week started on a slow note with not many trades being reported, by Thursday prices picked momentum against the backdrop of a rise (by INR 600/t in last two days) in domestic sponge iron prices due to rise in billet prices and slight pick-up in demand. In a confirmed deal heard at Gangavaram port, RB2 prices are being assessed at INR 5,600/t, exclusive of cess and GST.
“Domestic sponge and portside coal prices are showing signs of recovery as steel and pellet prices have seen some correction in the last few days. Billet prices too have moved up this week. However, the pace of recovery in coal prices is still not in line with the rally in API4 index”, quoted a trader based in Raipur.
He further added that at the current index, domestic portside prices should be anywhere between INR 6,400-6,500/t ex-Gangavaram whereas the prices are trending at INR 5,500-5,600/t.
What is driving up API4 index?
South Africa’s API4 index has been heading north since past one week as Force Majeure has been declared at RBCT port amid poor weather conditions. Delays are being heard in country’s coal rail system and also in case of cargo loading activities resulting in not many vessels being exported.
CoalMint’s vessel-line-up data reveals that starting February, about 0.41 mn t of S.African coal vessels are at berthing position, 0.14 mn t are at anchorage, and 0.48 mn t is expected to arrive at Indian ports by 20 February. Last month also saw far lesser quantity of South Africa coal coming to India due to the extension of maintenance work at RBCT port for 15 days. The RB2 discounts to India are heard in the range of $13-14/t.
In the ongoing situation Indian sellers are trying hard to raise their portside prices to the levels of INR 6,000/t so that our losses can be reduced to a certain extent, quoted a trader based in Delhi.
Outlook
Market participants are expecting some pickup in domestic steel and sponge iron demand. This coupled with no confirmation on how long Force Majeure will last, the domestic portside prices are expected to see some recovery in upcoming days.
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