India: RB2 portside rates ease further by INR 1,800/t w-o-w on falling imported prices

Portside prices of South African (SA) RB2 (5500 NAR) grade corrected further by INR 1,700/t across key ports this week as the declining trajectory of imported coal prices continued.

Demand from sponge iron manufacturers also remained limited as they avoided making any major bookings in anticipation of prices falling further in the upcoming days. 

RB2 portside trade prices for current week

*Prices in INR/t, ex-cess and GST

Despite portside prices falling by more than INR 4,000/t in two weeks’ time, sponge iron manufacturers continued to assess market conditions before making any major bookings.

While few sponge iron plants opted for buying smaller quantities of portside coal this week, several large plants were even heard to be covered till the next one month, informed market participants.

Portside RB2 prices also came under pressure with the expectation of domestic coal supply improving following the recent auction announcement of Coal India subsidiary Mahanadi Coalfields (MCL).

In a recent development this week, MCL, in Odisha has decided to sell 5.56 mn t of coal through a series of auctions to the non-power sector in the first week of November, which are likely to reduce the burden on the sponge iron sector. 

Portside deals concluded

In various confirmed deals collected by CoalMint between 25-28 Oct’21, a total quantity of 51,500 t of RB2 coal has been traded at an average price of INR 15,500/t, ex-Gangavaram this week. 

Imported South African  prices drop 32% from their peak

Following the sharp correction in thermal coal prices in China, South African RB1 (6000 NAR) grade coal price for November declined by a whopping 30% to $165/t for November, from their peak of $244/t.

Thermal coal prices in China have declined to their lowest in more than a month to 1,235 yuan/t ($193/t), on the Zhengzhou Commodity Exchange as the government recently made some announcement of intervention in the coal market to stabilise prices.

The discounts for RB2 and RB3 are currently assessed at $20/t and $30-31/t respectively for Nov’21 loading cargo.

Capesize vessel freight from RBCT to Gangavaram fell slightly to $27/t.

 Short-term outlook

CoalMint believes, portside South African coal prices are likely to remain under pressure in the upcoming week amid the declining trajectory of the South African coal index and the improving domestic coal supply in India.