- Demand weak despite price surge, buyers hold 1-2 months of stocks
- Bid-offer gap widens, buyers may shift to lower-priced domestic coal
South African thermal coal prices at Indian ports surged sharply w-o-w amid rising export offers, rising freights, and geopolitical tensions in the Middle East, which have disrupted global energy markets. As per BigMint’s assessment, exw-Paradip RB2 (5,500 NAR) increased to INR 11,700/t and RB3 (4,800 NAR) to INR 10,400/t, up by around INR 1,100-1,200/t w-o-w. At Vizag, RB2 rose to INR 11,600/t and RB3 to INR 10,300/t, reflecting strong cost push from the seaborne market. Prices have climbed to a three-year high, as per data maintained with BigMint.
Market participants noted that firm demand from Europe and China for South African coal amid gas and oil supply disruptions supported export prices and tightened spot availability.
Export offers, freight push import costs higher
FOB RBCT offers for 5,500 NAR were heard around $100-110/t, implying approximately $116-120/t CFR India levels, while 4,800 NAR offers were heard around $80/t FOB, translating to nearly $95-100/t CFR India. Freights were reported higher by around $4-5/t w-o-w following a hike in Brent crude oil futures amid geopolitical tensions in the Middle East, which added further pressure on delivered cargo costs.
Market sources indicated that April-loading cargoes from miners were heard around $110/t FOB, while trader offers for high-seas cargoes were around $120/t CFR. At the portside, offers were reported around INR 12,000-12,300/t exw Mangalore and Vizag for 5,500 NAR, although transactions remained scarce.
Buyers adopt wait-and-watch strategy
Despite the steep price surge, buying interest remained weak as many consumers already held 1-2 months of inventory. Buyers preferred to remain on the sidelines amid uncertainty over whether the rally would sustain. Market participants noted that the bid-offer gap widened significantly, with buyers reluctant to match elevated offers.
If import prices remain elevated for a prolonged period, several consumers may shift towards domestic coal as a more cost-effective substitute. Some sponge iron producers also indicated the possibility of production curtailments if margins come under sustained pressure.
Inventories decline; domestic coal, sponge iron prices rise
Portside thermal coal inventories across India declined 3.6% w-o-w to 13.14 mnt in the week ended 27 February from 13.63 mnt, extending the correction after the recent peak. High import offers and uncertainty around Indonesia’s RKAB (annual mining work plan) approvals dampened fresh booking activity.
Domestic non-coking coal prices increased w-o-w, supported by higher imported coal prices and stronger premiums in recent SECL auctions. As per BigMint’s assessment, 4,500 GCV rose by INR 50/t to INR 4,950/t, while 5,000 GCV increased by INR 50/t to INR 6,000/t exw Bilaspur.
Meanwhile, sponge iron P-DRI DAP Durgapur increased sharply by INR 600/t w-o-w to INR 25,700/t, supported by higher raw material costs across the value chain. However, market participants indicated that sustained high coal prices could pressure margins if finished steel demand fails to keep pace.
Leave a Reply