5500 NAR steam coal from South Africa assessed at USD 74-76/MT CFR India. Market participants anticipate that Coal India Limited (CIL) is likely to raise prices in October.
SteelMint assessed South African 5500 NAR steam coal is being offered at USD 74-76/MT CFR India on High Sea Sales (HSS) basis to be delivered in October.
An Indian importer said that current offers for South African RB-2 (5500 NAR) are holding at USD 74-76/MT CFR India. He also mentioned that inquiries for imported coal have increased from Sponge manufacturers particularly in eastern region on the backdrop of lower quantity being available in e-auction.
In similar lines, Sponge manufacturers highlighted that e-auction prices are unaffordable at the moment and it makes sense for them to import coal.
“Since CIL has reduced the quantity in e-auction by 5%, prices are moving unreasonably high in the domestic market; making it unfeasible for any Sponge manufacturer. Most of us are going for import considering current prices and quality. We require 1 MT of South African coal to make 1 MT of Sponge iron against 1.5 MT of Indian coal,” said a Sponge iron manufacturer based in Raipur.
It was also heard that a consortium of Sponge manufacturers based in Chhattisgarh have ordered for a large size coal vessel from South Africa.
Coal Importers face Problems as Port Congestion increases
Some importers have complained that the port authorities are not providing berths for unloading the pre sold coal cargo even after the vessels have been waiting for several weeks. Due to this, the importers are incurring heavy losses.
According to sources, there are 4-5 vessels waiting for the port clearance for unloading their cargo including vessels of KCT, Saraogi Udyog and Mercuria. The capsized vessel of KCT carrying 1.5 lakh tonnes of South African coal has been kept waiting for the last 40 days and the company is losing around USD 20,000 per day as demurrage rate and other expenses.
Similarly, there are 2 capesize vessels of Saraogi Udyog have been waiting for the last 1-month. Also, a vessel of Mercuria group has been kept waiting for the last 20 days. As per an estimate, these vessels are losing about USD 0.5 million a day.
Some importers have complained that as the largest importer of Coal in India, the company is trying to keep its monopoly in the sector.
Coal India likely to raise Prices
CIL may raise prices of lower-grade coal, used to generate power, by about 10% – a move that will help offset the fall in miners’ revenues from selling smaller volumes through e-auctions. The price revision could be reviewed soon at a board meeting. CIL has been asked by Centre to restrict sales through e-auctions to 5% of total production; roughly 20-22 MnT from 10%.
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