South African RB-2 Coal Offers at USD 80/MT CIF India

• South African RB-2 offers at USD 80/MT CIF Indian Port
• Richard Bays’ Coal export to South Asian countries up by 13%
• Coal India supplies 3% of production to Indian Sponge units on long term basis

South Africa is turning out to be a preferred source of Coal imports for Indian buyers. According to Richard’s Bay Coal Terminal data, it exported about 2.83 MnT Coal in the month of June against 3.6 MnT in May, 2014 to South Asian countries like India & Pakistan. Total imports in June stood at 4.9 MnT against 5.58 MnT in May, 2014.

Volumes have come down in June owing to monsoon, when Indian importers do not prefer to import much as it creates risk of generating high moisture content.

South African RB-2 Coal is being offered at about USD 80/MT CIF Indian East port on high sea sales basis (HSS) delivery to be made 3rd or 4th week of July, 2014.

Indian Sponge iron manufacturers have raised their Coal purchases of South African Coal for two prime reasons:

1. Sponge iron manufactures switching to Pellets
2. Quality issues with Coal India

With irregular supply of Iron ore, Sponge units are switching to Iron pellets, which is consistent in quality and requires good quality Coal to reduce it. Sponge manufacturers are also facing quality issues with Coal India, which have forced them to go for imports.

“We have offers for RB-2 at USD 80/MT CIF Gangavaram for 5,500 NAR having volatile matter of 22-24%, but we are expecting offers at about USD 78/MT on HSS, to be delivered in July-end. Last trade on spot sales was heard at about INR 5,800-5,900/MT Ex-Port,” said a Sponge manufacturer who recently received offer from a Singapore based trading house.

Sponge iron manufacturers’ total Coal requirement is about 40-42 MnT (assuming Sponge iron production at 24-25 MnT), out of which 13-14 MnT (3% of Coal India’s production) is allotted by Coal India as linkage and rest they have to buy from e-auction or go for imports.