Thermal coal suppliers around the world are closely
monitoring the Indian coal stocks and power tariff situation for early signs of
recovery in imports; but experts believe thermal coal import into India would
be slow to recover unless higher input cost is neutralized.
Currently, many power utilities are said to be losing money.
Slowing global economic growth and fears of demand compression have sent the
commodity markets into a tailspin. In recent weeks, the coal market has faced a
slowdown due to weak demand worldwide for seaborne thermal coal.
“The South African coal benchmark price, API4, has recently
been trading below $110/MT after spending most of the year closer to $120/MT
due to weak global demand for seaborne thermal coal,†Barclays Capital pointed
out in a recent report.
On November 17, API4 traded at $107.3/tonne on ICE, down
from $111.5/tonne a month earlier. Stocks levels in the country have fallen to
alarmingly low levels. This follows a slowdown in domestic production during
August-October period because of wet weather, flooding of coal stocks and
industrial action.
A combination of lower production and slowing imports has
resulted in coal shortage which in turn is seen affecting power production.
However, It is expected that the dangerously low level of utility coal stocks
in India would force large-scale imports and provide some support to weakening
international prices. But, the volatility in Fore-ex market and depreciating
Rupee will keep a check on the buying interest.
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