India: RB2 grade stock and sale offers inch down by INR 100/t

Key Highlights:

—South African coal RB2 (5000kcal/kg) grade thermal coal stock and sale offers at key ports like Gangavaram, Krishnapatnam, and Haldia ports have fallen by an average of INR 50-100/t this week.

—The current offers at Gangavaram port are assessed at INR 4,400 -4500/t, Krishnapatnam port at around INR 4,600/t and Haldia port at INR 5,350-5,400/t.

—Lacklustre demand from sponge sector and increased stockat ports are cited as the reason for fall in stock and sale prices at the ports.

—As on 14 Sep’20, thermal coal stock at major Indian ports was recorded at 16.3 mn t against 11.5 mn t around same time last year.

—In case of sponge iron, the prices have been fluctuating this week with finally settling at around INR 19,500-19,700/t in Central India, with no major change in demand.

—RB3 grade stock and sale offers at Gangavaram port are currently being heard at INR 3,750/t.

Import offers from South Africa to India remain unchanged

Imported coal at CFR India basis for Sep-Oct shipments

—The freight for capesize vessel has remained unchanged this week and
is reported to be at $12.5/t for east coast of India.

—The South African coal price is not finding support in
India because of increased competition from cheaper Australian 5500 NAR coal.

“The cement sector in India seems to be shifting towards Australian coal because of cheaper offers and similar freight rates to India”, quoted atrader based in Mumbai.

—Australian 5500 NAR coal offers in India are being
assessed at $51-52 CFR India for September en shipments whereas for October
delivery the same are being heard at $38-39/t, FoB Newcastle.

Future outlook

In the ongoing scenario of competition from Australian coal in cement sector and sluggish demand in sponge iron industry, any uptick in thermal coal prices from South Africa is highly unlikely.