Low freight charges and improving demand is leading Indian
importers to shift focus to better quality South African steam or thermal coal.
Indonesia, however, continues to be the single largest supplier of imported coal
to India.
According to a data available India
imported approximately 95 million tons (mt) of thermal coal used in electricity
generation in 2012, increased by 14 % from 83 mt in 2011.
Of the total, about 21 mt of steam coal was imported from
South Africa, which is a rise of 30 % compared with 2011. Nearly one third of
imports from South Africa, during the last year, took place during the
October-December quarter.
Analysts suggest that, India's market share in South African
exports is stable at 55 MT for the last two years and has increased from 30 % in 2011, to about 40 % in 2012. The corresponding share of China has increased
from 16 % to 23 %.
Compared to Indonesian coal, South African varieties have
low moisture content, leading to higher heat value and higher prices. While
Indonesian coal of 6,300 kcal a kg (on gross as received basis) costs $74-75/MT (FOB), similar variety South African coal is priced at $89-90.
Declining sea freight is due to drop in crude prices as well
as oversupply of vessels, has made it beneficial for Indian users to use South
African coal.
According to a prominent importer, average cost of importing
coal from Richard Bay to Indian East coast by large capesize vessels is down by
nearly 40 % from $16 a ton to $11-12 in last 6-12 months. Whereas for smaller
supramax vessels (50,000 DWT) freight has declined by 20 % to reach at $18.
Meanwhile, market participants are of a view that coal
prices are unlikely to see any upward movement in next 6-12 months. This is
largely due to lower consumption outlook of China. According to a recent report, the emerging superpower is trying to reduce growth in domestic coal output to 4 %, due to stockpiling.
However, Indonesian miners are in a hurry to export low rank
coal before the nation forces them to preserve such assets for domestic
industry. The emerging situation is beneficial for India, which is set to step
up on imports in the near term to keep its power plants running due to an
overall short supply of domestic coal.
Sourced
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