The Indian bookings for Australian thermal coal seem to have been reduced over past two months amid supply disruption in Australia in March and now due to rising COVID cases in India.
In mid-March, severe storm and heavy rains made Hunter Valley rail line and Newcastle port to shut down for few days, affecting coal transportation and loading activities at the port.
While situation normalised in the start of April and Indian buyers made few bookings ahead of monsoon season, sudden spike in COVID cases since past few days and subsequent lockdowns and restrictions have made Indian buyers of Australian thermal coal to move to the sidelines.
In addition to this, the escalated freights since February is also adding to the woes of Indian importers. The freight between Australia and India for panamax vessel is currently assessed at $20/t which was $10/t same month last year and around $16/t in Jan’21.
CoalMint’s vessel line-up reveals, arrival of only 0.27 mn t of Australian thermal coal in India between 17 Apr-5 May with majority bookings by end-users (cement and power).
Amid very few bids from India for 5500 NAR Australia coal at $54-55/t, offers are heard at $58-59/t, FoB Newcastle basis. A deal for 5500 NAR coal is heard to have been concluded at $74.5/t, CFR Vietnam basis for May shipment whereas 6000 NAR is being offered at $76/t, FoB basis.
Indian coal imports from S.Africa also take a hit
In the current scenario of rising COVID cases, Indian buyers are shying away from making South African thermal coal bookings also. CoalMint’s vessel line-up reveals, only 0.68 mn t of S.African coal arriving in India between 19 Apr-10 May.
On the supply side, South African coal index price has surged by 13% in past two months, due to Tansnet’s Freight Rail (TFR) locomotive issues. The rail line’s contracts of spare parts for locomotives had been abruptly cancelled in Feb’21, in the wake of irregularities at ‘Transnet’, making them to stop few locos so they could use spares from them, informed market participants.
While the supply constraints have eased a bit now, the freight between RBCT to Indian ports continues to remain escalated and is averaged around $20/t for panamax vessel and $15/t for capesize vessel.
Outlook
Amid the uncertainty over lockdown in India, and availability of domestic coal if needed, Australian thermal coal bookings from India are likely to remain sparse in the upcoming weeks. While the S.African thermal coal prices are anticipated to remain under pressure due to higher freight costs and lowered demand from its key coal importer, India.
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