Despite a sharp rise in imported South African thermal coal prices this week, portside prices of low- to mid-CV grades remained in a tight range as bulk bookings by sponge iron manufacturers were limited.
The emergence of new alternate blends in the domestic market has dampened demand for South African coal as elevated global prices and reduced supply offer little room for traders to lower their portside offers.
Bids from sponge iron makers were elusive as production volumes are running at minimal capacity. A few largescale sponge iron units are heard to be covered till September, while smaller ones prefer small parcel trades mainly for blending purpose with Mozambican, Russian or Australian coals.
“There is very limited stock at ports and vessel arrivals are also seen lower in the coming month. The time lag between port and sponge iron units is growing longer because of lower rake availabilty,” a Vizag-based trader said.
As per CoalMint vessel data, thermal coal arrivals from the country will be at 160,000 t by 5 August. The volumes are much lower than weekly average shipments from the country 250,000 t.
Portside prices
Low-CV RB3 (4800 kcal/kg NAR) grade coal prices at Vizag Port this week were in a tight range of INR 15,400-15,800/t, while mid-CV RB2 (5500 kcal/kg NAR) coal prices remained elevated at INR 18,000/t. Prices exclude cess and GST.
Limited LNG supplies stoke European coal demand
Enquries from European buyers surged sharply this week as Russian energy giant, Gazprom, drastically reduced its gas deliveries via the Nord Stream pipeline to about 20% of its capacity.
High-CV RB1 (6000 kcal/kg NAR) grade coal prices rose sharply to $335/t, up $34/t w-o-w.
Europe’s dependency on coal is set to rise further as the Russian state-run company would reduce the supply to 33 million cubic metres a day – half the amount it has been delivering since service resumed last week after 10 days of maintenance.
Short-term outlook
Portside prices of South African coal are likely to remain in a tight range amid weak domestic demand. However, elevated imported prices are likely to limit any major fall in portside prices.
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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