India’s thermal coal imports fell for the fourth month in a row to 9.48 million tonnes (mn t) in Aug’21, down 6% m-o-m, and 21% y-o-y, CoalMint’s vessel line-up data revealed.
The declining trajectory of the country’s thermal coal imports can be attributed to:
- Surging global thermal coal prices
- Resilient vessel freight rates
- Availability of cheaper domestic coal
Coal imports from South Africa and Australia fell by 21% and 22% m-o-m to 1.90 mn t and 1.45 mn t respectively. Imports from Indonesia, however, rose 22% m-o-m to 5.27 mn t, snapping a declining trend of the last three months, majorly due to imports of low-CV coal. Coal imports from Russia recorded a marginal rise of 2% m-o-m to 0.24 mn t.
Sector-wise coal imports
| SECTOR | Jul’21 | Aug’21 | % Change m-o-m |
| Trader | 5.04 | 5.20 | +3.1 |
| Power | 2.54 | 1.80 | -29 |
| Cement | 0.90 | 0.78 | -13.2 |
| Steel and sponge iron | 1.10 | 0.78 | -28.9 |
| Others | 0.19 | 0.45 | +135.3 |
*Qty in mn t
Imported coal prices rise 25% in Aug’21
South African coal prices rose in Aug’21 amid demand pick up from Pakistan and Vietnam. The average price of the RB2 (5,500 NAR) grade coal moved up by 10% m-o-m to $110/t.
Owing to weaker demand for imported thermal coal especially from sponge iron sector, Indian importers of South African coal avoided any major bookings last month.
Australian 5500 NAR prices also increased by 25% at 110/t FoB thereby denting demand from cement manufacturers as they majorly preferred buying domestic or the U.S. thermal coal.
Demand for Indonesian coal, however, remained higher due to pick up in demand by textile, ceramics, paper, and chemical industry. Indonesian coal shipments were majorly limited to low-CV grades due to the rising prices of higher-CV grades.
Coal-consuming units continued to blend low-CV Indonesian coal with domestic coal last month.
Port-wise import of thermal coal
| Indian Ports | Jul’21 | Aug’21 | % change m-o-m |
| Ex-Mundra | 1.41 | 1.60 | +13.5 |
| Ex-Gangavaram | 0.74 | 0.41 | – 44.6 |
| Ex-Krishnapatnam | 1.43 | 0.70 | -51.3 |
| Ex-Vizag | 0.71 | 0.58 | -18.8 |
| Ex-Paradip | 0.07 | 0.09 | +26 |
| Ex-Mangalore | 0.12 | 0.09 | -16.6 |
*Qty in mn t
Sector-wise demand scenario
Sponge iron: The sharp rise in portside RB2 prices and uncertainty over strong demand post the monsoon season compelled sponge iron manufacturers to adopt a wait-and-watch mode as they continued operating using domestic coal. However, trading activity picked up slightly in the latter half of the month as domestic coal supply crunch compelled sponge iron units to secure small quantities of imported coal.
Power: India’s power consumption witnessed a 18.6% m-o-m growth in Aug’21 at 129.51 billion units (BU), as per official data. Despite the rise in consumption due to easing of lockdown curbs and improved economic activity, many power companies were heard to be using domestic coal.
Cement: Rising raw material prices continued to keep coal procurement of cement plants under pressure as demand for domestic coal and relatively cheaper U.S coal was the dominant factor. Also, cement buyers adopted a wait and watch approach amidst anticipation of Coal India’s linkage auction announcement for cement sector that was ultimately announced in the first week of Sept’21.
Outlook
As per CoalMint’s analysis, thermal coal imports are likely to rise in the upcoming months due to constrained coal supply in the country as power plants are having very little coal stock and several mines are even facing supply constraints due to heavy rains.
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