According to the South African custom data, India has recorded the highest monthly coal imports in Sep’17 for CY17, resulted from high buying from Sponge iron sector.
Indian coal imports had increased 29% M-o-M to 3.99 MnT in Sep’17 comparable to 3.09 MnT in Aug’17,which was also the highest total since May’16.
Increased coal demand from both India and South Korea had even helped South Africa to achieve new highs during the month, as South Africa had witnessed their highest ever monthly coal exports of 8.26 MnT since CY10, the period upto which SteelMint has maintained customs data.
Coal Shortages at Indian power plants had affected the Non-power sector as well, following MCL’s decision to cut down coal supply to Non-power customers for the second successive month.
Domestic miner MCL had asked Non-power consumers (lifting coal through FSA and Linkage route) to procure only 80% of the monthly scheduled quantity for Nov’17, having previously requested the same in Oct’17 to augment coal supplies to power plants.
In the period of low domestic coal production and supply regulations to Non-power sector, Indian sponge manufacturers were in a buying spree having waited much longer for monsoon to end.
Sponge iron sector were finding imported South African coal more viable than the domestic coal. A sponge iron manufacturer had commented that, coal costs INR 10,400/MT for sponge manufacturing while using domestic coal comparable to INR 7500/MT for South African 4800 NAR coal.
Normally, 1 MT of imported Non-Coking coal is equivalent to 1.3 MT of domestic coal supplied by CIL, because of the high ash content in Indian coal. Moreover, the very cause of importing coal was also supported by the higher domestic coal price as a result of aggressive buying in the auction.
The coal grades used by Sponge manufacturers were reportedly INR 1070-1850/MT higher than the corresponding reserve price, which traditionally yield INR 250-300/MT above the base price in the spot auctions conducted by MCL.
South African Coal Prices were stable during the month until the news of workers’ union NUM going to strike had up ticked API-4 index to USD 95 levels. With the possible ban on pet coke on the cards, South index price is expected to be range bounded between USD 92-95.
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