India: Feb’21 coking coal and PCI imports subside sharply on limited buying interests

India’s coking coal and pulverized coal for injection (PCI) import shipments have totaled 54.43 million tonnes (mn t) so far in FY 2021 (Apr’20-Feb’21) — down by over 5% from 57.56 mn t during FY 2020.

On a month-on-month basis, the country’s coking coal imports fell by 20% to 4.58 mn t in Feb’21, compared with 5.74 mn t in Jan’21, on decreased shipments from Australia among others.

Over three-fourths of India’s coking coal import shipments still continued to be originated from Australia.

More importantly, the country’s PCI import shipments have decreased by 40% m-o-m to 0.75 mn t in Feb’21, as against 1.25 mn t in Jan’21.

Earlier however, India’s coking coal imports had rebounded since Aug’20 – from a near two-year low in Jul’20 – amid recovering steel demand, mainly because of a rise in domestic steel consumption.

Source: Vessel lineup data

India to benefit from China’s ban on Australian coking coal—

Following China’s ban on Australian coking coal since mid-October last year, the threat of excess supply had weighed on prices, thereby reducing the production cost of steelmakers using the blast furnace route in India.

Barring weather-related supply disruptions, Australian premium hard coking coal (HCC) prices would be hovering below $150/t CNF India for now.

India’s coking coal imports from Australia registered a 22.3% m-o-m reduction in the last month of February to 3.57 mn t.

Indian inbound shipments of coking coal from Canada also reduced drastically last month whereas coking coal shipments from Indonesia, Mozambique and Russia grew by considerable volumes contrasted with the previous month of January.

The following table presents a detailed country-wise break-up of the monthly import data.

Quantity in tonnes (t)

Current Market Scenario & Near-term Outlook—

The Indian market has been lately observing a considerable decrease in enquiries for seaborne coking coal, while spot transactions were relatively limited other than existing long-term contracts.

Indian buyers are mostly refraining from immediate procurement of seaborne coking coal cargoes in hopes that offers could decline further.

Nevertheless, seaborne coking coal sellers are targeting the Indian market where buyers are finally showing an interest and are receptive to spot fixed-price offers, having sat on the sidelines as of late.

Indian steel market sentiment was relatively steady last month while price expectations for seaborne coking coal were lifted higher amid the strength seen in domestic coking coal prices of all grades.

Traders anticipate that imported coking coal demand would pick up soon on restocking needs, as the country’s steel plants have been operating at optimum blast furnace capacity levels in recent months.

Full-scale demand revival for spot purchases of seaborne coking coal by Indian steel mills will likely take a while and is anticipated to start showing signs of robust growth in the next quarter at the earliest.