After remaining firm over the last two weeks, portside offers for South African RB2 (5500 NAR) grade corrected by INR 1,000/t at Gangavaram Port as sponge iron manufacturers kept to the sidelines as they preferred domestic supplies.
Portside offers for RB2 coal were assessed at INR 19,500/t this week, while bids were much lower at INR 18,000/t, as per CoalMint assessment.
The sharp decline in sponge iron prices forced buyers to refrain from booking imported coal at elevated rates as they expected further correction in portside prices.
Sponge iron prices (PDRI) have come down by INR 1,600/t w-o-w basis to INR 40,200/t ex-Raipur basis.
“The production cost is more than the selling price of sponge iron currently. This is why buyers are refraining from buying bulk quantities at these rates. Meanwhile, given the slight increase in coal stock at ports, traders were also floating counter-offers,” a prominent sponge manufacturer said.
Higher stock accumulation at ports was also among the factors behind the fall in portside RB2 offers. Thermal coal stock at major ports witnessed an 8% w-o-w rise of 12 mnt during 20-24 Mar’22, CoalMint stock report reveals.
Thermal coal stock at Gangavaram Port also rose 18% w-o-w to 0.5 mnt, data showed.
Higher domestic coal demand
Demand for domestic coal remained robust as the majority of sponge units were dependent on it.
Ever since imported coal prices have seen a sharp rise, sponge iron manufacturers switched to domestic coal with 80% blending ratio currently.
However, its availability remained a key issue as increased dispatches to the power plants had compelled South Eastern Coalfields Ltd to cancel its 0.8 mnt auction scheduled for 21 Mar’22, according to a notice on its website.
The cancellation came after SECL witnessed bid prices rising over INR 12,000/t for G7 coal offered in its auction held on 11 Mar’22.
RB2 portside prices
Prices in INR/t, ex-cess and GST
RB1 coal prices come down
RB1 (6000 NAR) grade coal prices witnessed a $15/t w-o-w decline to $255/t FOB as on 31 Mar’22. Easing crude oil and gas prices also pulled down coal prices this week.
Stock at RBCT Port also witnessed a rise up to 2.3 mnt but fell by over 28% y-o-y.
There were no major discounts for RB2 coal this month, while the discount for RB3 (NAR 4800 kcal/kg) was heard at $12/t. The discount for RB2 coal for May’22 delivery, was however, seen at $15-16/t, traders said.
Outlook
Portside RB2 prices are likely to remain firm as South African coal vessels that were booked in March at an average index of $350/t, are expected to arrive in April, leading to an added pressure of selling at the prevailing market conditions.
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