India’s thermal coal imports witnessed a 26% m-o-m decline to 12.4 mnt in April, 2022 as the Russia-Ukraine conflict that spurred global thermal coal prices to record highs in March deterred Indian buyers from making import bookings last month, CoalMint vessel line-up data reveals.
Price analysis
*Price in FOB ($/t)
An analysis of prices prevailing before the war with the current situation reveals that Australian 5500 kcal/kg NAR and South African RB2 (5500 kcal/kg NAR) coal prices rose by 40% and 38% respectively in April while Indonesian prices rose 31%.
Renewed sanctions imposed on Russia by the USA, EU and some Asian countries has created a coal supply crunch from Russia resulting in increased demand for other-origin coal and pushing up prices overall.
Shipments from South Africa and Australia record highest fall
*Qty in mnt
As seen above in the price table, with the highest rise in South African and Australian coal prices, the decline in shipments from both countries have been the sharpest.
On the supply side, logistics disruptions in South Africa weighed on shipments despite the fact that a few large Indian sponge iron manufacturers that were devoid of domestic supplies were eager to book imported material directly from the country.
Waterlogging in the coal-producing regions of the Hunter Valley in New South Wales, Australia, and vessel queues outside NSW ports of Newcastle and Kembla affected shipments from the country last month.
Thermal coal shipments from Indonesia fell by 20% last month. However, a sharp fall was limited as the government allowed power plants to increase imports for coal to meet the shortfall of electricity supply during summer.
Imports from Russia were nil last month amid escalated freight charges and the high risk of cargoes entering war zone. The government has been working on a Rupee-Rouble mechanism to increase coal imports from the country. However, the same is likely to take some time.
Sector-wise imports
*Qty in mnt
Sponge iron: Thermal coal imports by the sponge iron sector recorded a sharp decline of 68% m-o-m to 0.6 mnt in April amid rising unviability of running operations at such high raw material costs.
Power: Increased power demand amid the coal supply crunch compelled utilities to secure imported cargoes, thus recording a rise of 7% in April. However, elevated prices capped any major rise in imports.
Cement: Thermal coal imports rose modestly by 8% last month as cement manufacturers were eager to build inventory before the monsoons.
Outlook
As per CoalMint analysis, a supply crunch in the country is likely to incentivise imports next month. However, elevated prices and logistical bottlenecks may also cap any major rise in India’s thermal coal imports.
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