The third week of February proved to be dull for portside prices of South African RB2 (5500 kcal/kg NAR), amid limited demand, especially from Raipur sponge iron market.
Market participants informed CoalMint that while there were very few inquiries for RB2 coal from Raipur market this week, the situation was slightly better in Odisha resulting in price variations in both areas.
In a confirmed deal, 5,000 tonne of RB2 coal to an Odisha sponge buyer has been sold at INR 5,700/t ex-Gangavaram, while in another confirmed deal 2,000 tonne of RB2 coal has been sold to sponge manufacturer in Raipur at INR 5,500/t. Prices are exclusive of cess and GST.
The sluggishness in Raipur is attributed to limited demand of sponge iron coupled with increased availability of domestic coal. Coal India’s subsidiary, SECL has recently put 0.83 mn t of coal for auction with 32% of the quantity being suitable for sponge industry.
Given the lowered portside prices for RB2 coal, Indian importers are compelled to sell their material at a loss of INR 600-700/t.
“The situation has been quite bad for us since past few days, it has never happened like this in the past and is something new to deal with”, quoted a reputed importer based in Delhi. He further added that with Raipur buyers switching to domestic coal, situation could worsen in the coming days if the sponge sector does not witness an uptick in demand.
Trade deals at other ports:
- 7,500 tonne of RB2 coal sold at INR 5,700/t ex-Mangalore
- 5,000 tonne of RB2 coal sold at INR 5,650/t ex-Paradip
- 2,000 tonne sold at INR 6,400/t ex-Haldia
Break in API4 index rally
The API4 index, which had seen a steady rise in the earlier weeks, has seen a marginal correction of $0.3/t on Thursday at $88.6/t. The surge in index is being attributed to the persisting maintenance issues in Transnet (S.African rail operator) since early January.
“API index would remain at elevated levels till the Transnet issue is resolved which is likely to remain for 2-3 months. The price rally has stopped at present because there is limited demand from India for South African coal, otherwise it would have increased dramatically in past few days”, quoted a miner based in South Africa.
Outlook
Sponge iron prices in Raipur market has seen a rise of INR 300-500/t d-o-d basis and is currently assessed at INR 25,300-25,500/t amid a slight pick-up in demand. However, the positive effect of the same is likely to be observed in RB2 portside prices only if this increase continues. Market participants have informed us that the inquiries for RB2 coal from Raipur has increased today.
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