Portside prices of South African low-CV RB3 (4800 kcal/kg NAR) grade coal continued to remain stable with trades being heard at INR 13,000-13,300/t levels at Vizag Port.
Sponge iron manufacturers were heard making small-scale bookings as international prices were largely unchanged on a weekly basis, and also due to accumulated stocks that would last till December-end.
“Sponge iron makers have shifted their procurement plans till January as they have sufficient RB3 stocks. The focus is shifting back to South African coal against Russian. No major bookings are being made with Russian suppliers,” said a DRI producer source.
The source further added that there were not many offers for RB2 (5500 kcal/kg NAR) coal for the Indian market, and even buyers are not interested due to its high prices that are hovering around $165/t CNF India levels. If only there is a substantial decline in prices, DRI producers may target booking volumes for next year.
About 0.8-0.9 t of RB2 (5500 NAR) grade coal is used to make 1 t of sponge iron, while RB3 usage is higher at 1.1 t.
Russian coal demand falls
There is reduced demand for Russian coal from the Indian DRI sector due to quality issues in the absence of homogenous blending. The blending of Russian with South African coal (in 30:70 ratio) has failed to bring in the required yield, informed market participants.
Australian thermal coal of 5100 NAR and 4600 NAR grades, which are also being used in DRI units, are heard to have higher CSN (Crucible Swelling Number), which in the long-run spoils DRI kilns, and therefore their demand has fallen from the sponge iron sector.
RB1 prices remain stable
High-CV RB1 (6000 NAR) grade coal prices continue to remain stable at $196/t FOB as the issue of derailment that had taken place on Transnet’s rail lines connecting to RBCT port (two weeks back) has been completely resolved.
Transnet Freight Rail (TFR) has cleared all 97 derailed wagons from the derailment site at the North Corridor and train operations resumed operations on 20 November.
RB2 grade coal prices were assessed at $165/t and RB3 at $145/t CNF India basis.
Outlook
Portside prices of low-CV RB3 coal are expected to remain in the similar range as export duty removal on steel didn’t have any major positive impact on sponge iron demand. In fact, domestic sponge iron prices have come down by INR 2,500/t w-o-w and are assessed at INR 28,000/t exw-Raipur. With demand for coal from Europe expected to remain sluggish, chances are high that imported RB3 coal prices may weaken in the coming days.
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