Depreciating INR coupled with poor response of Indian sponge makers, is exerting pressure on South African coal prices to go down further, which have already declined to USD 55/MT CFR East Coast ports.
Offers for South African RB2, majorly used in sponge making, have declined again marginally in this week. Current offers have fallen to USD 1-2/MT and reached USD 55-56/MT CFR East Coast India for mid- Sept’15 arrival. Global traders and miners are already offering the material at its lowest but falling sponge prices and devaluating INR is influencing buyers to negotiate more. They are also resisting fresh deals, analyzing highly fluctuating market. Few deals have been negotiated at USD 54/MT CFR India.
Adani Enterprises highlighted, “Gangavaram Port, based at East Coast of India having a supramax vessel loaded with South African RB2 (5500 NAR) stock and sell material, is currently offering at INR 4,300/MT. Meanwhile, same grade material offers at Dhamra is comparatively high 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 further added by the official.
Impact of Devaluating INR
The INR exchange rate against USD has increased widely this month and reached the level of USD 64-66.Today INR depreciated again and crossed the level of USD 66.There is not much buying interest from Indian sponge makers owing to recent volatility in INR. Most of them are waiting for the currency to settle down.
However, depressed global market and weak Indian response on the grounds of increased domestic supply are stalling the recovery of South African coal prices. Prices are still weak, having reached the bottom in this year, but which are expected to recover soon in coming months.
Vessel Freight Rate
The freight of shipping coal in Panamax vessel from South Africa to India is assessed at USD 11-13/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 44-45/barrel on Thursday may further influence freight prices in near-term.
Leave a Reply