Amid the ongoing coal supply crunch in India, thermal coal imports witnessed a 20% m-o-m rise to 14.7 mnt in May 2022, CoalMint’s vessel line-up data reveals.
Shipments from Indonesia were the highest, while vessel arrival from Russia surfaced for the first time after its invasion of Ukraine. A total of 0.3 mnt of thermal coal imports took place from Russia last month for a major power producer and a trading house.
Earlier last year, average monthly shipments from Russia were to the tune of 0.2-0.3 mnt.
The country’s thermal coal imports last month rose overall as global prices eased from their record-high levels in March.
Price analysis
*Price in FOB ($/t)
A comparison 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) prices fell by 22% and 20% respectively in May while Indonesian prices fell slightly by 2%.
Shipments from Indonesia record highest rise
*Qty in mnt
As Indonesian coal prices remained in a tight range over the last two months surrounding weak Chinese demand, Indian buyers emerged as the country’s highest importer, with volumes rising by 27% m-o-m in May.
Indian power plants were the biggest buyers of Indonesian coal as the government mandated power producers to import 30% of their imported coal requirement for blending.
Weak domestic steel demand on account of elevated South African coal prices, however, kept imports from this country largely unchanged last month.
Heavy rainfall and flooding at mine pits continued to affect imports from Australia in May.
Interestingly, shipments from various other sources, including Colombia, Malaysia, and Tanzania, also surfaced due to their cost advantage over other origins.
Sector-wise imports
*Qty in mnt
Sponge iron: Thermal coal imports by the sponge iron sector recorded a marginal rise of 6% m-o-m to 7.3 mnt in May amid rising unviability of running operations at such high raw material costs.
Power: Expectation of higher power demand amid the coal supply crunch compelled utilities to secure imported cargoes. Thus, the sector recorded a sharp rise of 38% in May. The country’s power consumption grew 13.6% y-o-y to 132.98 billion units (BU) in April. Power generation by domestic coal-based plants that blended imported coal has more than doubled to 143 million units (MU) per day in May compared to 66 MU/day last year, as per official data.
Cement: Thermal coal imports also rose sharply by 21% last month as cement manufacturers continued to build inventory before the monsoons amid strong demand conditions.
Outlook
As per CoalMint’s analysis, the ongoing coal supply crunch in the country is likely to incentivise imports next month with domestic miner Coal India seeking cargoes to boost inventory before the monsoon. However, elevated prices on a y-o-y basis and logistical bottlenecks may also restrict any major rise in India’s thermal coal imports.
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