Portside prices of South African RB3 (4800 NAR) coal rose by INR 200-300/t w-o-w this week to INR 13,000/t levels ex-Vizag. Prices exclude cess and GST. While a few deals were heard concluded this week, demand remained largely steady from the sponge iron sector. However, limited availability of stock at ports and improvement in sponge iron demand pushed portside RB3 prices higher.
Interestingly, demand for Australian 4600 NAR grade coal is steadily increasing in the Indian sponge iron industry. This coal has FC (fixed carbon) content of 42-43% and VM (volatile matter) content of 27-28%. One tonne of sponge iron requires about 1.15 t of this grade of coal. However, it is being used in different blends with South African and domestic coal, and prices are currently assessed at INR 9,900/t ex-Gangavaram.
“Australian thermal coal prices are gaining popularity in the Odisha and Chhattisgarh sponge iron markets. With not-so-positive sponge iron demand, manufacturers are looking for alternate blends to improve their margins and cut down on costs”, a coal trader based in Vizag informed.
On the other hand, Russian thermal coal has lost its charm for the Indian sponge iron sector due to quality issues. The price for low-VM Russian 6000 NAR coal is currently assessed at $175-180/t CNF India.
Sponge iron prices rise
The week started on a positive note with sponge iron prices rising amid tight domestic scrap supplies. Sponge iron prices rose by INR 1,200/t w-o-w touching INR 30,000/t (for PDRI) exw-Raipur.
While there is no major improvement in finished steel demand, sellers who were on the backseat since the past few weeks and were holding stocks, raised their offers this week. In fact, domestic scrap prices rose by INR 3,000/t, while billet prices rose by INR 2,500/t this week.
Imported coal offers unchanged
While the API4 index rose by $13/t this week to $252/t, there was no change in RB3 offers which continue to remain at $150/t CNF India for January vessel arrivals.
European demand for South African coal is expected to pick up in the coming days as temperatures drop in December, which may support prices.
What lies ahead?
Portside prices of South African coal are expected to either remain stable or increase marginally on the anticipation of positive demand for sponge iron and limited availability of stock at ports. However, sluggish finished steel demand may limit any major rise in either sponge iron or portside coal prices.
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