Devaluation in currency market would eventually have facilitated exporters but weak INR against USD is influencing thermal coal imports in India.
South African 5500 NAR coal, mostly preferred by Indian sponge manufacturers in steelmaking has retreated to USD 55-56/MT CFR India. The offers have remained moreover stable in the current week, as depreciating INR against USD is influencing dollar dominated thermal coal imports in India. Although, subdued Indian demand, coupled with rising domestic availability, is not supporting market recovery. Current index for RB1 coal is at USD 54.5/MT FoB basis and market have been trending low as future prices are reflecting a downtrend.
Meanwhile, RB2 material is being offered at USD 57/MT CFR at Dhamra port and low GCV RB3 is being offered at USD 51-52/MT CFR Gangavaram Port for Sep’15 delivery.
One East Coast based trader is currently offering RB2 at comparatively high prices at about USD 57-58/MT CFR India. However, no such deals have been done on those prices as buyers are prefering to negotiate below market offers, because devaluating INR has already increased import cost.
Another East Coast based trader mentioned offering South African RB2 (5500 NAR) stock and sell material at Gangavaram Port at INR 4,300/MT. Meanwhile, same grade material offer at Dhamra is comparatively higher at INR 4,400- 4,500, owing to additional charges levied at the port.
Also, low GCV South African RB3 is offered by at INR 4,000/MT and 4,100/MT at Gangavaram and Dharma port respectively, the trader added the further.
Total Import from South Africa in FY15 & FY16
South Africa, one of the largest exporters of coal to India, has supplied about 28.9 MnT of coal in FY15. India’s coal import for South African grade has risen by around 50% in FY15. India has imported about 26.6 MnT of non-coking coal in the recently ended fiscal, which was about 17.5 MnT in FY14. In the current fiscal (Apr’15-Aug’15) Indian has imported about 14.2 MnT of Non-coal from South Africa.
Vessel Freight Rate
The freight of shipping coal in Panamax vessel from South Africa to India is assessed at USD 9-12/MT. Freight has risen marginally in last one month and is currently in the range of USD 8-13/MT for all size of bulk vessels. In the current scenario, falling crude oil prices which declined to USD 40.5/barrel may further influence freight prices in near-term.
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