South African RB2 (5500 NAR) coal portside prices have gone flat since past few days with prices stagnating at INR 5,500/t ex-Gangavaram.
Tepid buying interest from sponge manufacturers and preference to domestic coal over imported ones are cited as key reasons for the current status quo in the portside RB2 prices.
Recent deals
In a confirmed deal heard, 5,000 tonnes of RB2 coal have been sold at INR 5,525/t ex-Gangavaram and in another trade heard 3,000 tonnes have been sold at INR 5,500/t. Although few reputed traders are not ready to sell below INR 5,700/t, no trades are being heard at this rate.
At other ports, confirmed deals are heard of RB2 coal (10,000 tone) being sold at INR 5,650/t ex-Paradip and at INR 5,800/t ex-Mangalore.
Sponge market scenario
The domestic sponge iron prices gained a momentum of INR 400-600/t last week amid pick-up in demand from Raipur market and is now trending at INR 26,800-27,000/t, ex-Raipur. However, this failed to provide any support to portside RB2 coal prices amid sufficient stock available at port, increased availability of domestic coal and price rise panic in API4 index.
Indian importers take a backseat
The price rally in South African API4 index has stopped since last two weeks and the same is trending at $83.1/t for March. The thermal coal stock at Gangavaram port towards the end of last week stood at 2.95 mn t (down by 1.83% w-o-w), CoalMint stock report revealed.
In order to deal with the ongoing situation of sufficient stock at port and sluggish demand, Indian importers of South African coal have taken a backseat and are not making any bookings for imported coal. Also, rise in freight rates in last few days has resulted in Indian importers delaying their purchases.
The freight for panamax vessel from RBCT to Gangavarm port is currently trending at $17.5/t. This had touched a high of $22/t last week and was around $14/t a month back.
CoalMint’s vessel line-up reveals, no South African coal vessel is arriving at Gangavaram port in March whereas only 0.16 mn t of South African coal is arriving at Hazira port by 28 March. The discounts for RB2 coal continue to hover around $14/t whereas for RB3 (4800 NAR) it is $26/t.
In a confirmed deal heard, a power utility purchased two capes of South African coal last week at the rate of $42-43/t, FoB RBCT basis for April-May loading.
Outlook
Given the current scenario of sufficient stock at port and good domestic coal availability, any hike in portside prices for RB2 coal (in near-term) seems likely only if there is significant increase in demand from sponge sector.
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