Category Archives: Non Coking

India: South African RB2 coal price at INR 8,800/t, ex-Mangalore

South African RB2 (5,500 NAR) grade coal prices at Mangalore port were assessed at INR 8,800/t amid limited availability of domestic coal in the southern region. Traders expect portside prices to remain elevated amid rising RB1 (6,000 NAR) grade coal price and export uncertainties from South Africa. The Transnet port terminals have declared force majeure at all ports including RBCT following last week’s cyber attack.

 

India: Thermal coal stocks at Mundra Port down 13% w-o-w on inventory reduction

CoalMint’s stock report reveals that thermal coal stocks at Mundra Port have declined to 1.83 million tonnes (mn t) in week 30, as on 22 Jul’21, down 13% w-o-w due to reduction in the inventory of a few importers and a lower number of vessels arriving at the port.

The inventory of Adani Power fell by 40% w-o-w to 0.60 mn t. Owing to less portside trade amid higher prices, inventories of several importers also remained largely unchanged from last week.

Thermal coal stocks at Gangavaram Port continued to be the highest with 3.08 mn t this week. CoalMint’s stock report reveals that Adani Enterprise accounted for the highest volume of stocks at the port at 1.05 mn t, followed by BSP, Indian Coke, and Swiss Singapore which jointly accounted for 1.48 mn t. RINL’s stocks were at 0.45 mn t.

Stocks at Vizag and Paradip ports were largely unchanged 2.22 mn t and 1.76 mn t, respectively, while the same at Krishnapatnam fell by 7% w-o-w to 1.68 mn t.

Coal stocks at Haldia Port fell to 1.39 mn t this week as against 1.47 mn t last week with the decline in inventory of SAIL (3% w-o-w) and Tata Steel (14% w-o-w).

At Kandla Port, thermal coal stocks were at 1.08 mn t due to a fall in the inventory of Mohit Minerals, Agarwal Coal and JSW Minerals.

Port Week 30  Week 29 Difference (in %)
Ex-Gangavaram 3.08 2.96 +4.15
Ex-Vizag 2.22 2.20 +0.6
Ex-Krishnapatnam 1.68 1.81 -7.28
Ex-Mundra 1.83 2.11 -13.4
Ex-Haldia 1.39 1.47 -4.94

*Quantity in mn t

 Stocks of Adani Power decline 19% w-o-w

Thermal coal stocks of Adani Power were at 2.21 mn t, down 19% w-o-w with the major portion held at Hazira (1.01 mn t), Mundra and Dahej ports (0.60 mn t each).

This was followed by Tata Steel with 1.06 mn t held at Dhamra, Paradip, Haldia, and Mangalore ports. The company’s stockpiles recorded a decline of 13% w-o-w.

Stocks of Adani Enterprise, however, remained the highest at 3.29 mn t in week 30. Major portion of its stocks were held at Gangavaram Port (1.05 mn t), Krishnapatnam Port (1.06 mn t) and Mundra Port (0.73 mn t).

Following this was SAIL, with most of its stocks stationed at Haldia (0.98 mn t), Vizag (0.60 mn t), Dhamra (0.41 mn t), and Paradip (0.15 mn t) ports.

 

Pakistan: Long waiting period for vessels at Qasim Port

A long queue of thermal coal vessels at Qasim port in Pakistan has led to a waiting period of 10 days on average. The reason can be attributed to more than expected vessel arrivals, especially from South Africa, market participants informed. CoalMint data shows that around seven thermal coal ships are at anchorage position, while two are at berth at the port. These vessels were booked when South African coal prices started to rise in the first week of Jun’21. Pakistan’s cement and power sectors are the key buyers of South African coal.

 

Pakistan: Long waiting period for vessels at Qasim Port

A long queue of thermal coal vessels at Qasim port in Pakistan has led to a waiting period of 10 days on average. The reason can be attributed to more than expected vessel arrivals, especially from South Africa, market participants informed. CoalMint data shows that around seven thermal coal ships are at anchorage position, while two are at berth at the port. These vessels were booked when South African coal prices started to rise in the first week of Jun’21. Pakistan’s cement and power sectors are the key buyers of South African coal.

 
Commercial Mining Auction

India: 2nd tranche of commercial coal mining auctions in final round

The second tranche of the auctions for commercial coal mining is approaching its conclusion with the electronic round of bidding set to commence from 2 Aug ’21.

In a major contradiction to the initial trends, the auction process failed to garner adequate participation as no bids were received for 48 of the 67 coal blocks put up for sale.

Additionally, out of the remaining 19 blocks, only eight have qualified for the electronic round which had received multiple bids in the technical round.

Reflecting a decline in investor appetite for coal mining amid environmental concerns and lower margins, the number of blocks in contention for allocation has significantly reduced compared to the previous tranche. It may be recalled, in the previous tranche, a total of 19 blocks had entered the final electronic round of the auctions.

This comes after the coal ministry had offered the highest number of blocks in a particular tranche post-commencement of the auctions regime since 2014 in order to encourage higher participation.

Auction schedule

The current round of sales has witnessed selective preference for blocks with lower coal reserves. Interestingly, of the eight blocks, none has coal reserves of more than 250 million tonnes (mn t).

Out of the four coking coal blocks, only Jogeshwar and Khas Jogeshwar make the final cut which will be auctioned on day one along with Gondkhari and Jhingdor blocks.

Day two features sales of two blocks which will be followed by the auction of three blocks on the final day, including Burakhap Small Patch which had received the highest number of bids in the technical round.

Auction Schedule

What’s next?

After the electronic round of auctions, these eight blocks will be allocated to the successful bidders.

As far as the remaining 11 coal blocks with single technical bids are concerned, their fate will be decided through another re-sale attempt, which is expected to be initiated after the conclusion of the current round.

 

South Africa: Transnet Port Terminal declares force majeure following cyber attack

South African state-owned Transnet Port Terminals declared force majeure across all container terminals including Richards Bay and Durban port on 26 Jul’21. This comes on the heels of a massive cyber attack last week that crippled the terminals’ IT operations. The cyber attack impacted the ability of port divisions to digitally track goods containers that entered or left the country’s ports on a daily basis. The port divisions are manually tracking containers resulting in long delays. This would likely impact the country’s coal exports from RBCT port and would further contribute to price hike.

 

Russia: Trans-Siberian railway block to hit coal exports

Rail services were suspended on Russia’s Trans-Siberian railway in the latter half of last week following a bridge collapse due to excessive rainfall. The world’s longest railway is a strategic transportation artery for the Russian economy, ferrying various commodities including coal between Europe and Asia. Services are expected to resume by 28-29 Jul’21. Russia has emerged as a major thermal coal exporter to China in 2021 with the latter reeling under coal shortage and increased power requirements.

 

Russia: Trans-Siberian railway block to hit coal exports

Rail services were suspended on Russia’s Trans-Siberian railway in the latter half of last week following a bridge collapse due to excessive rainfall. The world’s longest railway is a strategic transportation artery for the Russian economy, ferrying various commodities including coal between Europe and Asia. Services are expected to resume by 28-29 Jul’21. Russia has emerged as a major thermal coal exporter to China in 2021 with the latter reeling under coal shortage and increased power requirements.

 

Indian sellers hopeful of rise in RB2 coal portside prices in the days ahead

Despite limited trades of South African RB2 (5,500 NAR) grade coal over the last few weeks, portside offers at Gangavaram port remained higher in the range of INR 8,600-8,800/t. Direct importers are refraining from reducing RB2 offers on the expectation that sponge iron manufacturers would have to accept high offers in the coming days as a complete switch over to domestic coal is unlikely for sponge iron units and also because of limited quantity of S.African coal arriving in India during Aug’21.

 

Indonesia: Rising Covid cases, China floods push up high CV thermal coal prices

The Indonesian Coal Index (ICI) for all grades rose sharply last week amid robust coal demand in China and lower availability of cargoes from Indonesia.

Constrained global supply of high CV coal also lifted the Indonesian 6,500 GAR grade price to $119.3/t, FoB, up 12.4% m-o-m.

Indonesian coal prices

Grade Jul’21 W2 Jul’21 W3 w-o-w change
3400 GAR 37.05 38.49 +1.44
4200 GAR 64.92 67.90 +2.98
5000 GAR 93.73 96.75 +3.02
5800 GAR 105.59 107.35 +1.76
6500 GAR 116.11 119.26 +3.15

*Price in $/t

 What is driving up Chinese demand for Indonesian coal?

Amid depleting coal stocks at power plants and severe floods in a few provinces, demand for thermal coal witnessed a sharp rise last week as buyers rushed to book imported coal cargoes.

Thermal coal stock at Qinhuangdao Port, a major coal transfer hub in northern China, fell by 5% w-o-w to 3.57 mn t towards the end of last week.

On the other hand, heavy floods in the country have disrupted mining operations at the major coal producing province of Henan. Transport of coal from Zhengzhou (Henan’s capital) and other top mining regions like Inner Mongolia and Shanxi, to central and eastern China has also been severely impacted.

Adding to the woes, several small and mid-sized coal mines in Shaanxi province had suspended production following a coal-mine accident in mid-July.

Demand from Chinese utilities and power plants for Indonesian coal currently remains the strongest and is mainly for the low-mid CV (3,400-5,500 NAR) category. However, lower availability of cargoes until at least the next month is pushing the prices higher,” an Indonesia-based trader said.

On the supply side, production at several mines in Kalimantan is heard to have slowed down due to rising Covid-19 cases there and limited work force, while cargo availability also remained lower.

Indonesian coal output in the first six months of the year reached 286 mn t, Indonesian energy ministry data showed. The Jan-Jun’21 coal output equated only 47% of its annual target of 625 mn t as adverse weather conditions since the beginning of this year decelerated coal production from the country’s key mining regions.

Indian importers evaluating market dynamics

The rising trajectory of Indonesian coal prices and expectations of a pick-up in demand after the monsoon have prompted several Indian importers to look for cargoes during late Aug and Sept, informed market participants.

However, reduced end-user demand amid increased raw material costs are also preventing importers from making any major bookings.

Demand for domestic coal continued to remain high as many coal-consuming industries in India have shifted to coal blending. However, steel, textile, paper, and sugar units located in the southern and western belts, and a few in the central region continued to procure low-CV imported coal in smaller quantities.

According to market participants, stock of 4,200 GAR in Kandla is quite limited while portside offers for the same in nearby Navlakhi Port are at INR 7,000/t.  Portside offers for 5,000 GAR in Kandla have risen to INR 7,700/t, up 19% m-o-m in case of advance payments (prices exclude cess and GST).

Short-term outlook

CoalMint believes, Indonesian coal prices are likely to remain elevated in the near-term amid robust procurements from China.

Though miners in Indonesia have ramped up output over the last few months to meet China’s demand, rising Covid-19 cases continue to disrupt operations there.

Portside offers in India are also likely to remain elevated in the face of depleting stocks and lower cargo arrivals amid rising prices.