India: RB2 portside prices correct by INR 2,500/t as imported rates drop 24% on week

After rising sharply over the past one month, portside prices of South African (SA) RB2 (5500 NAR) grade coal across key ports have corrected by INR 2,500/t this week. This is in line with the dramatic correction in imported thermal coal prices seen in China.

RB2 portside trade prices for current week

*Prices in INR/t, ex-cess and GST

 With the dramatic fall in the imported prices, sellers have to correct their portside prices too. Also, majority of the sponge iron manufacturers are already in a wait-and-watch mode, procuring coal stocks in smaller parcels, in expectation of of further drop in prices.

With the persistent weak demand from the finished steel sector and elevated thermal coal prices, sponge iron plants have been operating at reduced capacities for over a month now, having drastically cut down on procurements to reduce major losses on books.

Sponge iron prices (PDRI) ex-Raipur have seen a correction of INR 1,000/t w-o-w  and are currently assessed at INR 36,500/t.

Portside deals concluded

In various confirmed deals collected by CoalMint between 18-22 Oct'21, a total quantity of 55,000 t of RB2 coal has been traded at an average price of INR 17,500/t, ex-Gangavaram this week. RB3 prices were assessed at INR 15,000/t.

What led to correction in imported coal prices?

A sharp decline in China's thermal coal futures has pulled down coal prices of most  origins, including  South Africa.

The most-active thermal coal futures on the Zhengzhou Commodity Exchange, for delivery in January, tumbled to RMB 1,380.8 per tonne  -  down more than 30% since Tuesday's all-time peak of RMB 1,982 per tonne ($310/t). This sharp decline came after China's top economic planner pointed to  the Chinese government's intervention to stablise domestic coal prices.

South Africa's RB1 (6000 NAR) index price for November has fallen by 24% from the peak of $244/t as on 14 October to $186/t as on 21 Oct'21. The discounts for RB2 and RB3 are currently assessed at $20/t and $30-31/t respectively for Nov'21 loading cargo. Capesize vessel freight from RBCT to Gangavaram remained higher at $29/t.

Stocks at RBCT port, at 2.90 mn t, are down by 0.15 mn t w-o-w.

Short-term outlook

Imported South African coal prices may remain volatile amid the several trade developments in China as utilities struggle to get supplies. Thus, as per industry experts, it is very critical to comment on the S.African price trend and even portside prices.

However, with domestic coal supply expected to improve by mid-November for non-power sector, RB2 portside prices that had touched new highs in October recently would see some correction in upcoming weeks.