Portside prices of South African thermal coal have eased by INR 500-700/t w-o-w, mirroring a similar trend in imported rates, and limited bulk bookings due to the ongoing monsoon season.
The emergence of new alternate blends in the domestic market has further given new bargaining power to sponge iron manufacturers, exerting pressure on portside South African coal prices.
As per CoalMint’s assessment, low-CV RB3 (4800 kcal/kg NAR) grade prices at Vizag Port this week are assessed at INR 15,800/t, down by INR 700/t, while a few deals up to INR 15,100/t were also reported.
Mid-CV RB2 (5500 kcal/kg NAR) stood at INR 18,000/t, down by INR 500/t w-o-w at Vizag Port. Prices exclude cess and GST.
The fall in prices came as the most active August index of high-CV RB1 (6000 kcal/kg NAR) grade prices eased by $21/t w-o-w to $301/t FOB as gas supplies resumed from Russia’s Nord Stream 1 pipeline to Europe.
Alternate sources emerge
Sponge iron manufacturers continue to stick to small parcel trades as they were using RB2 and RB3 coal for blending with other alternate resources from Mozambique, Russia, and Australia.
This was possible as production volumes remained minimal amid sluggish demand conditions and the higher cost of production since last year had already burnt a hole in their pockets.
High-CV Mozambique coal was seen as a 100% substitute for South African coal, while a few sponge units located in the southern region were seen blending RB2 and Australian 4400-4600 NAR grades with low VM and FC at a 70:30 (5500 NAR South African: 4600 NAR Australian) ratio for one tonne of sponge iron.
Several DRI producers were also heard buying RB3 coal fines, prices of which were lower at INR 13,500-14,000/t, as these are easily inflammable as against coal during monsoons.
Short-term outlook
Portside prices of South African coal are likely to remain in a tight range. However, bulk procurement may remain limited amid the ongoing monsoon season.
To know more about the changing trend of coal usage in the domestic sponge iron industry join us at India Coal Outlook Conference. CoalMint will be hosting the India Coal Outlook Conference on 3-4 August 2022 at The Lalit, New Delhi, to discuss the key issues pertaining to domestic coal production and supply, the government’s objective of controlling imports and domestic supply gap affecting many industries, the need to increase the purchasing power of Indian steel companies in the volatile global coking coal market as well as issues related to decarbonization of the coal value chain.
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