South African thermal coal import prices rose fuelled by the Russia-Ukraine crisis and these continued to lift portside South African RB2 (5500 NAR) prices, while waning buying appetite of sponge iron units led to lower trading activities.
Portside offers for RB2 coal hovered within the range of INR 22,000-30,000/tonnes (t) this week amid very limited stock. Portside deals were last concluded at INR 24,500/t, up by INR 5,000/t w-o-w.
Limited vessel arrival from South Africa also compelled traders to increase their offers as a total of 0.9 million tonnes (mnt) are scheduled to arrive at various Indian ports till 21 Mar’22, CoalMint vessel line-up data reveals.
RB2 portside prices this week
Prices in INR/t, ex-cess and GST
With limited imported coal, sponge iron units that are key buyers of South African coal were heard scouting for domestic coal. However, its availability remained under pressure as rising power demand during the summer season made CIL redirect supply to the power plants.
Limited availability of domestic coal also resulted in a sharp rise in bid prices of the recent auction conducted by NCL which rose to INR 5600-6600/t for G-7 and G-8 grades.
*Price in INR/t
The sharp rise in coal prices continued to keep independent sponge iron units under pressure as majority of them either reduced capacity or suspended operations.
“Majority of sponge players have rushed towards domestic coal currently as imported prices are beyond reach. On the other hand, large-scale sponge units that can bear the cost are securing lower quantites to continue operations,” a Delhi-based trader said.
RB1 prices retreat slightly
After rising to its all-time high of $442/t, South African RB1 (6000 NAR) grade coal prices fell to $376/t, FOB as on 10 Mar’22 amid a decline in gas and crude oil prices.
The Russian government assured that it would continue to meet its contractual obligations of energy supplies to the EU.
However, market participants also believe that South African prices are unlikely to register any major decline amid critically low coal stock level at RBCT Port that are at 2 mnt, as against an average of 5 mnt.
Outlook
CoalMint believes portside RB2 prices are likely to remain elevated amid the resilient imported coal prices and limited stock at ports.
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