With the declining trajectory of imported South African coal prices, portside rates of low-CV RB3 (4800 NAR) grade coal have declined by INR 600/t w-o-w to 13,900/t at Vizag Port.
This drop has come alongside the fall in imported coal prices this week. South African RB1 grade coal prices have seen a correction of $40/t w-o-w, while RB2 (5500 NAR) prices fell by $25/t w-o-w to $150/t and RB3 (4800 NAR) were lower at $142/t, FOB.
The price decline comes amid weak European demand as inventories of coal-fired power plants in several parts of Europe are nearly full and are likely to last till the end of the year.
There seems to be little impact of these supply concerns on South African coal prices as the two key rail lines leading to RBCT Port have been closed after a derailment incident. Owing to this disruptive development, coal deliveries to the port are likely to remain affected.
Buying pattern of Indian sponge players
Sponge iron manufacturers in India continue to deal in small-parcel trades of RB3 coal, as its chemical composition suits appropriately into DRI kilns and has been more acceptable over alternate origin coal such as high-CV Russian and low-CV Australian Carmichael coal.
DRI producers in the eastern region of the country, who were predominantly experimenting with Russian supplies in the coal blends were heard shifting back to South African.
“We have increased RB3 coal content in our blends in recent weeks due to its tried-and-tested results. If imported coal prices continue to decline, DRI producers would prefer to stick to South African coal as no major vessels are being booked from Russia currently,” a sponge manufacturer said.
Several large-scale sponge iron units were heard to have sufficient stock for the next few months, while few would evaluate their procurement plans during Dec-end for early 2023.
South African and Russian coal arrivals
A total of 0.24 mnt of South African coal is set to arrive at Indian ports in the upcoming week with Adani Enterprise being the highest receiver followed by Swiss Singapore.
Russia coal to the tune of 0.29 mnt for Rashmi Group and Narayani Group is set to arrive in the upcoming week at the eastern coast of the country.
Outlook
Portside prices of low-CV RB3 coal may see a drop in case imported prices fall further. With demand for coal from Europe turning sluggish, chances are high that RB3 coal prices may weaken further in the coming days.
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