India Eyes on Quality Coal Imports

Downfall in Indian coal import during FY16 also comprises quality coal tracking from the non-conventional sources during the year, reflected some interesting outlook over the global market.

India, one of the largest dry fuel importers in the globe, has reduced its yearly coal import in FY16. But interestingly, the energy (GCV) imports volume is changing from low grade to high grade as the country is switching towards higher grade coal sourcing from South Africa, Colombia, Russia etc. In FY16, all these countries had shipped more coal to India compared to past year.

Drop in coal import along with sudden change in GCV imports indicates that major supplier Indonesia is in danger and struggling to be stable in the Indian market. Indonesia, a major supplier of thermal coal to India, supplied about 55% coal every year; declined by 16% in FY16.

Source: SteelMint
Quantity in MnT

Moreover, India is adopting fuel mixed concept at present as importing high grade coal to blend with low CV domestic coal for industrial use. Also, domestic supply has risen in India during FY16 to fulfill growing domestic requirement in the country along with make control on rising coal imports. The Indian government had planned to cut thermal coal import to zero in coming five years.

CIL’s coal production in FY16

Coal India, the world’s greatest coal producer, registered a total coal production of 536 MnT in FY16 with a growth of 8.5% against FY15. In addition, CIL has targeted 598.6 MnT yearly coal production in FY17, the target set by Coal India is 49 MnT higher than last fiscal.

Coal imports had fallen by 5.6% during FY16 because of rise in domestic supply by CIL. Whilst, domestic coal supply had ramped up by 8-9%, which had been catering to large consumers fruitfully.

Source: CIL
Quantity in MnT

India’s coal sourcing in FY16 Vs FY15  
As per SteelMint data analysis, India had imported around 219 MnT coal in FY16 (229 MnT Pet coke included). However, imports had seen first fall ever in last one decade, noteworthy fall of 11 MnT against last fiscal.

India purchases most of its coal from major supplying countries such as Indonesia, South Africa, Australia, USA, China and Saudi Arabia. These nations had supplied about 95% of total imports during the fiscal.

Indonesia remains to be the top exporter of non-coking and supplied about 117.7 MnT; registered a fall of 16% against FY15.

But the data breakup shows that there are few new sourcing countries, which have also taken place in the Indian market as major suppliers because India more keen to purchase quality coal presently . Countries such as South Africa, Colombia, Russia, USA, Mozambique and Canada emerged as high CV coal exporters in the country.

Source: SteelMint
Quantity in MnT

It is noted that in the first two months of the running fiscal, India imported about 41.6 MnT of coal with a marginal fall from 42 MnT during the same period in FY17.

India’s coal import by GCV value
India’s total coal import comprises more than 50% Indonesian grade every year. The received material having mostly low GCV value between 3800-4800 GAR, a lower quality coal mostly used in power plants.

South Africa coal export risen by 32% as the country largely shipped high CV coal between 5500-6000 NAR to India in FY16, mostly used in sponge and cement industry.

Colombia is rising as a new quality sourcing to India and a biggest thermal coal emerging player in the market. The Available grade 6000 NAR exported to India is  offering at comparatively low prices. Russia also gain its yearly coal export to India by 84% in Anthracite and non-coking coal supply, most of the supplied grade are high CV about 6300 GCV value in FY16.

USA majorly exporting high CV Non-coking coal to India contains at an average about 6000 GCV value.

On the other side, persistently shrunken price gap between high and low CV coal prices in the global market highly influencing Indian buyers to pay more for higher grade cargoes than to merely take low CV coal.