A sharp rise in imported South African coal prices this week again lifted portside offers for the RB2 (5500 NAR) grade by INR 1,500/tonne (t) to INR 21,000-22,500/t at Gangavaram.
However, bids continued to remain elusive from sponge iron manufacturers as they remained on the sidelines. However, a few deals were heard clinched at INR 21,000/t.
Amid rising war tensions in Russia, the EU imposed fresh sanctions on Russian energy imports. Although the sanctions are to be implemented from mid-August, 2022, the import curbs are already leading to increased demand for South African coal as buyers scurry to secure non-Russian supplies .
Inquiries from sponge iron players were muted as procuring stock at such higher rates remained unviable, a Raipur-based sponge player said. “Procuring at these levels would only add to our losses as sale volumes are dull,” he added.
Reduced domestic supplies
Limited supply of domestic coal to the non-power sector and preference to the power sector continued to weigh on the operations of sponge iron manufacturers.
It may be recalled there was a severe coal shortage in the latter half of 2021 which hit the power sector. Thus, Coal India has been focusing on supplies to this segment, as a result of which dispatches to the non-power sector fell 7% y-o-y in FY22.
In the resellers market, prices for the 5000 GCV were assessed at INR 15,250/t ex-Bilaspur, up by INR 500/t w-o-w basis.
RB1 coal prices bounce back
After witnessing a fall in the last two weeks, RB1 (6000 NAR) grade prices witnessed a $16/t w-o-w rise to $271/t FOB as on 7 April, 2022 as buyers in Europe and Asia rushed to procure following the announcement of Russian sanctions this week.
However, prices also retreated slightly by $7/t after the announcement that these sanctions are likely to take effect from mid-August, 2022, allowing Russian companies to export coal to the EU under existing contracts.
According to market participants, South Africa is seen as a key beneficiary of this move as its coal exports to major parts of Europe have increased sharply since 2021.
As per CoalMint data, South Africa’s export shipments to the Netherlands surged to 0.8 mnt in March, 2022 from a mere 70,000 t in February, 2022 as they looked for non-Russian-origin coal and gas.
There were no discounts for RB2 coal this month, while the discount for RB3 (NAR 4800 kcal/kg) was heard at $12/t. The discount for RB2 for May 2022 was, however, heard at $15-16/t and for RB3 at $24-25/t.
Outlook
Portside RB2 prices are likely to remain firm amid limited stock at Indian ports.
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