A sharp rise in imported South African thermal coal prices amid the Russia-Ukraine war has forced major coal sellers into the backseat in order to assess the market situation before floating offers.
Small and mid-sized sellers have limited quantity of coal left with them and these were heard selling RB2 (NAR 5500 kcal/kg) coal at INR 19,500-20,000/t ex-Gangavaram, up INR 2,000-2,500/t w-o-w.
RB2 portside prices this week
Prices in INR/t, ex-cess and GST
On the demand side, the sponge iron units that are key buyers of South African coal were heard scouting for RB2 coal even at escalated rates amid domestic coal shortage.
According to the market participants, the situation has become quite intricate for independent sponge iron units and they have either reduced their capacity utilisation levels considerably or have suspended operations.
Only the integrated plants are showing a modicum of buying interest and are ready to buy coal at current high levels.
Sponge iron prices in India touched an all-time high on 1 Mar’22 as the price for C-DRI (iron ore lump-based sponge iron) exw Raipur was assessed at INR 39,000/t, while P-DRI (pellet-based DRI) prices touched INR 38,200/t on exw basis.
RB2 import prices fetch whopping premiums
A sharp surge in European coal demand for non-Russian coal has lifted demand for South African coal as RB1 coal prices rose an all-time high of $430/t on 2 March, making it one of the most expensive transactions ever recorded. Prices have shot up a whopping $188/t w-o-w.
An acute supply shortage at RBCT Port due to logistical issues have resulted in reduced availability of coal from the country since the past few months.
RB2 coal that was sold at a discount till mid-Feb is now being sold at a premium of $20-40/t (depending upon the quality). RB3 (4800 NAR) were, however, offered at a discount of $2/t.
The exclusion of Russian banks from SWIFT has curtailed all commodity transactions from the country, prompting buyers to aggressively book coal from other alternative origins.
Also, the cost of loading has gone up substantially and importers’ cost burden has increased.
A total of 1 mnt of South Afrian coal-laden vessels are set to arrive at major ports in India til 17 Mar, CoalMint data show.
Outlook
CoalMint believes portside RB2 prices are likely to remain elevated amidst the sharp rise in imported coal prices. The constrained supply situation in South Africa is seen keeping thermal coal prices higher in that country even if the escalating tension between Russia and Ukraine eases in the near term.
Leave a Reply