Portside prices of the RB2 5,500 NAR grade coal continued to remain elevated this week following a rise in imported South African coal prices. However, weak demand from sponge iron manufacturers due to power cuts in Raigarh, Chhattisgarh and plants’ shut down in Rourkela region due to Covid restrictions capped any dramatic rise in RB2 coal portside prices.
RB2 coal weekly average portside prices
| Port | Jun’21 W1 | Jun’21 W2 |
| Ex-Gangavaram | 7,950 | 7,950 |
| Ex-Mangalore | 8,000 | 8,000 |
| Ex-Vizag | 7,950 | 8,000 |
| Ex-Paradip | 8,000 (old stock) | 8,400 (old stock) |
*Prices in INR/tonne and ex-cess and GST.
Amidst absence of new cargo arrivals at Haldia and Paradip ports due to escalated freights of panamax and supramax vessels, the old stock is being sold at quite high levels. At Haldia Port, RB2 coal offers are heard at INR 9,200/t this week.
Bids from Raigarh’s sponge iron cluster limited
Even as relaxation in lockdown restrictions was helping sponge iron units to return to normal levels, the recent power issues in Raigarh weighed on the operations.
According to market sources, Raigarh is facing power cuts amidst ongoing subsidy issue on power tariffs of Jindal Steel and Power Ltd (JSPL).
Jindal Steel and Power Ltd has an installed 299 MW captive power plant at Raigarh that supplies electricity to several small and mid-sized steel plants in the area.
Owing to a fall in production during the lockdown in Apr–May’21, several sponge plants failed to pay their dues and were asking for some subsidy. The power supply to such units has been discontinued on non-payment of the bills irking owners of manufacturing units there and resulting in shut down of few sponge iron units (15-20 plants) in retaliation. This has impacted the bids for RB2 coal from the Raigarh cluster especially at Gangavaram and Vizag ports.
In addition, a sharp rise in portside coal prices above INR 8,000/t, on-going Covid-induced restrictions and increased availability of domestic coal have also dented buying interest from Odisha, Maharashtra and West Bengal’s sponge iron cluster.
South African coal prices continue to ride north
Amidst supply concerns due to Transnet’s rail issues, increased buying from China, South Korea and Pakistan, and depleting coal stocks at RBCT Port, prices of RB1 (6,000 NAR) continued to rally to reach $116.7/tonne as on 10 Jun’21, up 4.5% week-on-week (w-o-w).
The discounts for RB2 and RB3 this week are assessed at $17-18/t and $28-29/t respectively while cape-size vessel freights between RBCT to Gangavaram continued to remain firm at $16/t.
CoalMint’s vessel line-up data reveals, around 1.26 million tonnes (mn t) of South African coal is slated to arrive at Indian ports during 8-24 Jun’21 with the highest volume of 0.32 mn t arriving at Gangavaram Port followed by Dhamra.
What lies ahead?
According to CoalMint analysis, South African thermal coal prices are unlikely to see any drastic correction in the coming days as long as supply tightness prevails amidst a strong global demand.
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