At the current movement South African Thermal coal prices for Nov’16 shipments have again climbed by USD 7-8/MT, FoB compared to last week. Besides, 6000 NAR index prices have crossed the level of USD 94/MT yesterday.
Raw material prices are on a constant surge keeping sponge prices under pressure in India. South African thermal coal, mostly preferred by Indian sponge utilities are soaring every week which resulted into limited buying by the end users in the country. India caters about 70% share in total South African coal exports but it is not viable now to operate on given prices.
At present, South African Coal have gained by about 9-10% compared to last week. Whilst offers heard, 5500 NAR coal at USD 88-89/MT, CFR India for early Nov’16 loadings. Low CV South African 4800 NAR is offered at USD 74-75/MT, CFR East Coast India and 6000 NAR high CV material have crossed the level of USD 100/MT, CFR India.
In the global scenario, South African coal is highly impacted by the increased unconventional global demand, limited cargo availability coupled with strong paper trading which triggered for the long term price rally.
The market is completely on wait and watch mode as there is lack of Indian buyer’s participation in the market because of the increase in coal prices in South Africa.
[su_quote]Mentioned by an East Coast based importer, “In India traders are holding their offers on the wake of price jump on every day. On the other side, traders are expecting higher numbers but buyers are not willing to take position on the given level.” [/su_quote]
Impact on Domestic Sponge Prices
In India, persistent rise in South African coal prices is squeezing profit margins of sponge makers which may turn to pass on the extra burden on consumers in near-term. On the other side high cost raw material have already left its impact on end product which have been moving up since Sep’16. In Early Nov’16, sponge prices have gained by about INR 300-600/MT W-o-W and by INR 400-700/MT on monthly basis.
Stock and Sale Offers at Indian Ports
South African stock & sale offers at ports have turned up sharply on the wake of continuous price hike. While Indian buyers are buying from port stocks, as they are still struggling to bid for fresh cargoes on highly volatile market.
A Panamax vessel of 5500 NAR coal which arrived early Nov’16 at port is offering the Indian trader in stock and sale at INR 6,400-6,500/MT at Vizag and Gangaveram Port. Whereas, at Dhamra port, same grade material is available at INR 6,600/MT loaded on truck basis (all duties and clearance included, VAT & CST will be added further). At West Coast Kandla port old material of 4800 NAR which was arrived in late Sep’16 is offered at INR 5,300/MT.
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