A sharp rise in imported South African thermal coal prices lifted portside RB2 (5500 NAR) rates by INR 1,200/t w-o-w to INR 17,500/t at Gangavaram Port, CoalMint’s assessment showed.
The onset of the war between Russia and Ukraine has led to sanctions being imposed by western countries, including the US and EU on the former. This in turn is seen affecting coal and gas supply from Russia to Europe and several parts of the world.
Amid the ongoing crisis, domestic buyers of South African coal were heard to be inquiring about RB2 aggressively as the availability of ready stock remained dire.
However, traders ran short of supply due to already booked cargoes and limited vessels at ports. Domestic coal supply for the non-power sector, on the other hand, also remained weak amid higher demand from the power sector ahead of the summer season.
Some major sponge iron units were heard to be booking long-term contacts on an index-linked basis to secure supply in these volatile times, market participants informed.
A total of 0.50 mnt of thermal coal from South Africa is set to arrive at Indian ports during 25 Feb’22-2 Mar’22, CoalMint data shows.
The rise in raw material prices also continues to keep sponge iron prices higher as these have further gone up by INR 1,300/t w-o-w and are assessed at INR 36,300/t, ex-Raipur.
RB2 portside prices this week
Prices in INR/t, ex-cess and GST
Imported South African coal prices shoot up in a day
RB1 (6000 NAR) prices surged by a whopping $37/t in a single day to $242/t and by $44/t w-o-w.
Amid constrained gas supply from Russia during the present crisis, and record-low inventory levels, Europe’s reliance on thermal coal is seen increasing heavily for power generation. Countries such as the Netherlands and Germany, are seen raising their import bookings.
The premium for RB2 has risen to $8/t, up by $3/t w-o-w, while that on RB3 (4800 NAR) was assessed at $5/t, as against a discount of $5/t last week.
Short-term outlook
CoalMint believes portside RB2 prices are likely to remain elevated amidst the tight inventory levels at Indian ports and higher import prices. Any easing of the Russia-Ukraine crisis may also result in a correction in South African coal prices.
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