The South African RB2 (5500 kcal/kg NAR) grade thermal coal prices at Indian ports have registered a drop this week by INR 600/t, w-o-w basis at Gangavaram port.
While the week started with a price fall of INR 500/t, the same fell further by INR 100/t towards the week’s end. On the basis of various deals confirmed by CoalMint, RB2 price at Ganagavaram port is currently assessed at INR 5,400/t (exclusive of cess and GST).
Whereas, at Krishnapatnam port RB2 was traded at INR 5,700/t and at Haldia at INR 6,500/t. RB1 (6000 kcal/kg NAR) prices at Kandla port are heard at INR 7,000/t, exclusive of cess and GST.
CoalMint learnt from market sources that the demand from the sponge sector (a major consumer of South African coal) is quite modest at present. This is despite South African coal index (API4) trending at a higher level, there is no panic buying by the sponge players.
Apart from this, another factor contributing to price drop is high inventory of thermal coal at Indian ports. The stock data maintained with CoalMint reveals that the average coal stock at ports stands to be around 17 mn t this December against 11.5 mn t in Dec’19.
The Indian government has been trying hard for substitution of imported coal with domestic, and more coal has been made available for the non-power sectors. Coal India’s data reveals that despite COVID-19 pandemic, its coal production during Apr-Nov’20 has moved up by 1.2% y-o-y and stood at 334.5 mn t. Also, it has registered a 77% growth in e-auction sales. There is increased appetite of thermal coal from non-power sector with auction sales of 17.4 mn t during the said period, up by 262% y-o-y basis. Special spot auction for coal importers also received a positive response with 3.3 mn t booked in November at a premium of 21%.
Outlook
In the given scenario, we believe that any dramatic hike in portside prices is unlikely and prices should remain stable for a few days.
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