India’s thermal coal import shipments from Indonesia dropped sharply by 33% m-o-m to 2.8 million tonnes (mnt) in Jan’22 as coal supply crunch in the latter country forced the government to impose a surprise export ban.
Although the ban was partially lifted after two weeks, the miners underwent a long wait before clearing out vessels.
Currently, Indonesian miners are focussed in clearing backlogs and fulfilling old contracts and declining to offer till Mar’22 amid tight supply conditions.
Furthermore, a 25% m-o-m rise in global coal prices and persistent supply disruption in Australia and South Africa also pulled down India’s total thermal coal imports by 16% m-o-m to 7.3 mnt last month.
Imports from South Africa flat
Import shipments from South Africa remained largely unchanged at 2.08 mnt in Jan’22, as coal demand from Indian sponge iron sector remained supported amidst limited domestic availability.
With a sharp decline in the South African coal index in Dec’21, Indian importers became active in booking coal. Limited cargo arrival from the country over the last few months had resulted in a drastic decline in coal stock at ports.
The tight supply conditions also had compelled buyers to make an advance booking for Feb’22-arriving vessels.
Imports from key exporters
India’s thermal coal imports from Australia fell by 8% to 1 mnt amid a sharp rise in its prices as several Asian buyers including Japan and Vietnam rushed to secure Australian thermal coal after Indonesia imposed export ban.
Prices of 5500 NAR grade coal prices rose to $144/t, FOB, up 42% m-o-m. A cargo of 6,000 t of NAR Australian coal was also confirmed to have booked at $300/t, marking it one of the most expensive cargoes ever transacted.
A total of 0.1 mnt of reloaded Australian coal cargoes from Chinese ports had also made its way into India last month.
Imports from USA rose by 67% m-o-m to 0.9 mnt last month amid rising demand of cement companies.
Sector-wise imports
Sponge iron: Thermal coal imports by the sponge iron sector recorded a sharp fall of 18% m-o-m to 0.7 mnt in Jan’22. The sharp rise in raw material prices continues to keep the profitability of sponge makers low with majority of units working at lower capacity.
Power: Imports by power plants fell 6% m-o-m to 1.4 mnt in Jan’22 mainly due to sky-high global prices. Domestic coal remained the major contributor to the country’s power needs as the government prioritised the power sector for coal dispatches following a supply crunch in Oct’21.
Cement: Thermal coal imports from the cement sector also fell by 43% m-o-m to 0.6 mnt in Jan’22 as manufacturers returned to procuring pet coke over a slight decline in its prices.
Outlook
As per CoalMint’s analysis, elevated thermal coal prices are seen as a major deterrent to India’s imports in the upcoming months.
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