Portside trades of South African RB2 (5500 NAR grade) coal remained largely muted this week amid limited stocks at major ports and fluctuating imported RB1 prices due to uncertainty about the Indonesian coal export ban.
Very few traders were heard offering RB2 coal and no major deals took place this week. Demand for RB3 (4800 NAR) coal, however, remained strong with several deals being concluded at a price range between INR 9,700/t and INR 10,400/t at Vizag Port.
Limited vessel arrivals from South Africa continued to keep portside stocks low. A total of 0.73 mn t of South African coal is expected to arrive at various Indian ports between 9-21 Jan’22, CoalMint vessel line-up data shows.
RB2 portside prices this week
Prices in INR/t, ex-cess and GST
Demand from sponge iron producers
With declining coal inventory at warehouses, several sponge iron manufacturers were heard enquiring about imported coal since the past week. Several units are even negotiating to bring direct cargoes from South Africa resulting in reduced portside trading.
Domestic coal despatches to the sponge iron sector remained largely unchanged compared to last month: 0.7 mn t in Dec’21 as against 0.6 mn t in Nov.
Domestic sponge iron prices have corrected downwards by INR 700-800/t w-o-w in the wake of steel demand turning sluggish due to a sudden rise in Omicron cases in the country and uncertainty about another lockdown.
South African coal prices surge
With trading activities resuming across the globe post New Year Holidays, RB1 (6000 NAR) coal prices rose from $116/t in the beginning of the week to $172/t towards weekend.
Lower cargo availability from South Africa continues to support prices. Global coal supply has come under further stress in Jan.
As the Indonesian government recently announced its intent to curb coal exports, traders from around the globe rushed in to book quantities from alternative sources such as South Africa and Australia.
The discounts for RB2 and RB3 were assessed at $12/t and $27/t respectively for Jan-loading cargoes.
Short-term outlook
CoalMint believes portside RB2 prices are likely to remain higher amidst limited vessel arrivals from South Africa in the coming weeks and also due to concerns surrounding global coal supply in the near term.
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