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India: No portside deals for RB2 this week, buyers make advance booking for February at a higher price

With almost negligible stock left with sellers at Indian ports, buyers have to make an advance booking for South African RB2 (5500 NAR) coal arriving in February. In addi...

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21 Jan 2022, 18:18 IST
India: No portside deals for RB2 this week, buyers make advance booking for February at a higher price

With almost negligible stock left with sellers at Indian ports, buyers have to make an advance booking for South African RB2 (5500 NAR) coal arriving in February. In addition to this, the deals are being concluded at a higher rate of INR 13,700-14,000/t.

The reduced stock at ports and limited vessel arrival from South Africa since the past few weeks has made sponge iron manufacturers rush for bookings. Amid the escalated coal prices in the country and a series of logistic disruption, supply from the country is seen limited.

According to market participants, weak inventory build-up at sponge iron plants over the last month has compelled buyers to seek material aggressively. Traders, on the other hand, has kept offers firm amid expectation of thermal coal prices remaining higher in the coming weeks.

Despite a rise in domestic coal supply to the non-power sector, sponge iron players continue to prefer imported coal due to its low ash content and impurities.

As per CoalMint data, thermal coal stock at Gangavaram Port have declined to 0.8 mn t, down 9% w-o-w and 33% m-o-m. Vessel arrival from South Africa also remains under pressure as a total of 0.42 mn t is set to arrive at Indian ports between 21-27 Jan'22, as per CoalMint data.

RB2 portside prices this week

Prices in INR/t, ex-cess and GST

South African coal prices elevated

South African RB1 (6000 NAR) grade coal prices have risen further to $160/t, FOB as on 20 Jan'22. It has risen over $40/t since the beginning of the year.

Consistent disruption surrounding Transnet Fright rail and network has resulted in an acute coal shortage at Richards Bay Port Terminal in South Africa.

Limited supply from Indonesia, despite the lifting of the coal export ban, also has aggravated the weak supply situation as countries such as China, Malaysia, India has been looking for alternate sources.

The severe coal supply shortage also has resulted in RB2 coal being offered at a $1.5-2/t premium over the index against a discount of $6/t last week while the discounts for RB3 had reduced to $8/t as against $17/t last week for Feb-loading cargoes.

Short-term outlook

CoalMint believes portside RB2 prices are likely to remain higher amidst limited vessel arrivals from South Africa in the coming weeks. Concerns surrounding the global supply disruption may also support the rise in prices.

 

21 Jan 2022, 18:18 IST

 

 

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