South African Coal Prices Maintains Stability

South African Coal prices have not seen any significant movement this week, with index price API 4 hovering in the range of USD 76-77.

South African coal index was assessed at USD 77.70 yesterday for Jun’17.

Congestion at Richard Bay Coal Terminal continued and had reduced cargo availability. Moreover, Tightness on coal availability still persists this week.

However, Market participants are anticipating these issues will be resolved soon, and would not affect coal prices further.

South African 5500 NAR was available at a discount of USD 7.5-8/MT to 6000 NAR prices, while 4800 NAR coal was available at a discount of USD 13/MT against buyers expectation of USD 15-16/MT.

At present, spot coal prices were assessed at USD 66-67/MT, FoB Richards Bay for 5500 NAR. While 4800 NAR was offered at USD 52-53/MT, Fob Richards Bay.

Indian Market Scenario:
India Buying has been affected by the news of GST implementation, as buyers wait to see the impact on forthcoming tax on coal sales.

The GST Council has kept coal at the lowest tax slab of 5%, which is down by 6.69 from the hitherto tax incidence of 11.69%.

According to the primary research done by CoalMint, GST will bring down domestic coal price in India, various taxes like Service Tax, VAT will be subsumed under GST and the total additional tax on coal will be 5%.

However, cost of imported coal is expected to increase due to GST, as buyers would have to pay 5% tax on account of tax in addition to 2.5% custom duty. At present, there is 2.5% customs duty and 2% countervailing duty (CVD) on imported coal.

CVD tax and VAT will be relaxed under GST; however additional tax of 5% will cause a hike in imported coal prices.

Moreover, GST may increase port charges following increase in tax on that to 18% from the existing rate of about 15%.

Further clarification on tax structure will be made available after the implementation of GST later this week.

5500 NAR coal was available in the stock and sale market at INR 5750/MT in Vizag port, and at INR 5800/MT in Krishnapatnam port. While 4800 NAR coal was available at INR 5200/MT in Vizag port and at INR 5200/MT in Krishnapatnam port (VAT/CST and TCS charges to be added in above prices).