The elevated freight rates have adversely impacted the import demand of various commodities and Australian thermal coal was no exception.
Volume of coal coming to India from Australia declines
CoalMint’s vessel line-up data reveals that about 0.98 mn t of Australian thermal coal is expected to arrive at Indian ports in March’ 21. This is quite low compared to the monthly average imports of 1.80 mn t that has been arriving each month since October 2020, after China’s ban on Australian coal.
The freight for a panamax vessel between Australia and India has spiked by 133% in the last one year and by 31% in past one month itself.
The increased demand from China post-pandemic and shut-down of various shipping companies globally has resulted in shortage of empty vessels. This has kept the freight rates at elevated levels.
However, market participants were expecting freight rates to correct by mid-March, but the situation seems bleak and is likely to continue for coming few more months. Market experts believe that it is highly unlikely for freight rates to return to pre-pandemic levels.
CFR India prices continue to rise as a result
In terms of prices, there is a stability since past one month on FoB basis. While 5500 NAR Australian coal is being offered at $57/t, FoB Newcastle basis, offer for a supramax vessel for April’s delivery is heard at $94/t, CFR East coast. The current freight for panamax vessel between Australia and India is assessed at $23/t.
Only a few months back excess Australian coal was available at Indian ports, making it feasible for the cement manufacturers to procure. However, Indian buyers are now waiting for freight rates to correct after the portside stock has dried out.
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