India’s thermal coal imports registered a 12% y-o-y decline to 140.4 million tonnes (mn t) in CY’21, amidst escalating global prices.
Global thermal coal prices registered an over 100% rise in 2021 as robust demand conditions clashed with limited supply of coal arising out of the adverse weather conditions or logistic disruptions.
However, a major fall in Indian imports was limited due to rising economic activity as compared to CY’20 following the outbreak of the Covid-19 pandemic, and a domestic coal supply crunch faced by industries in Oct’21.
Imports from Indonesia mark highest decline
India’s thermal coal import shipments from Indonesia declined sharply by 22% y-o-y to 74.23 mn t in CY’21 amid a sharp rise in its coal prices and limited cargo availability for the most part of the year.
Indian importers had drastically reduced coal bookings from Indonesia especially in the second half of CY’21 as Indonesian miners were charging substantially high premiums over export prices.
The major factor driving the rally in Indonesian coal prices was China’s robust coal import demand in 2021 amid its domestic coal shortage along with supply disruptions due to heavy rainfall in Indonesia.
Heavy rainfall, especially in the east Kalimantan regions had resulted in Indonesian miners missing their annual coal production target of 625 mn t by 45 mn t.
Imports from South Africa fall by 30%
Import shipments from South Africa fell sharply by 30% y-o-y to 26.2 mn t in CY’21 as RB2 (5500 NAR) grade prices increased by 95% y-o-y.
Coal supply from the country remained limited following a series of logistic disruptions, including IT glitches, rainfalls and unforeseen accidents.
Reduced gas availability for power generation especially in H2CY’21 had further supported South African coal demand, especially from the European market.
Imports from Australia, US rise sharply
India’s thermal coal imports from Australia rose by a whopping 157% while that from the US were up by 65% y-o-y.
Chinese ban on Australian coal in the latter half of 2020 had proved to be beneficial for Indian coal importers as shipments from Australia started registering a considerable rise.
The increased availability of Australian coal and its relatively cheaper prices made it the most perferable option for Indian cement companies to meet their fuel requirement.
A total of 1.2 mn t of reloaded Australian coal cargoes from Chinese ports also had made its way into India in CY’21.
Further, with the rise in pet coke prices especially in H2CY’21, US high-CV thermal coal also started gaining popularity in the Indian market, resulting in its increased imports last year.
Sector-wise imports
Sponge iron: Thermal coal imports by the sponge iron sector recorded a sharp fall of 18% y-o-y in CY’21 to 11.3 mn t. Amidst the volatile imported market and reduced capacity utilisation, buyers took a backseat on booking imported coal.
Power: Despite rising power consumption, coal imports by power plants fell 27% y-o-y to 36.3 mn t in CY’21 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, however, rose by 55% y-o-y to 15 mn t in CY’21 as manufacturers ditched pet coke over thermal coal owing to its comparatively higher prices. India’s pet coke imports fell sharply to 4.8 mn t last year, down 52% y-o-y.
Outlook
As per CoalMint’s analysis, while demand for imported thermal coal would continue to find support in CY’22 amid improved industrial activities and subsequent power consumption, the expected supply constraints and rising thermal coal costs would hamper the imports from the key countries.
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