After recording a fall in the first two months of 2021, India’s thermal coal imports have increased substantially by 24% m-o-m in Mar ’21 to 12.6 mn t against 10.3 mn t in Feb ’21, vessel line-up data with CoalMint revealed.
Indonesia continued to be the top exporter of thermal coal to India at 7.07 mn t, up by 27% m-o-m. However, a dramatic increase was recorded in coal imports from South Africa at 2.63 mn t in March against 1.11 mn t in February. However, this is still below the monthly average South African coal imports of 3.21 mn t in 2020.
Imports from Mozambique and Australia recorded a drop of 44% and 45% m-o-m at 0.01 mn t and 1.26 mn t respectively.
Looking at sector-wise thermal coal imports in Mar ’21, Power and Sponge iron sector have registered a m-o-m increase of 26% and 19% respectively. Whereas, imports by the cement sector fell marginally by 1% in March and stood at 1.21 mn t.
Indian importers make bookings despite escalated freight rates
In February, empty vessels shortage, especially in Asian market caused by snap lockdowns in U.S. and Europe and increased demand from China, saw sea freights from Indonesia and South Africa escalate by 40-60% m-o-m basis, making Indian importers postpone their purchases.
However, in March as the portside stock depleted due to limited vessel arrivals in Jan-Feb and improvement in domestic demand, importers made fresh bookings despite the elevated freight rates. This resulted in portside prices at Indian ports to shoot up by an average of 12% m-o-m basis.
Sector-wise demand scenario
Sponge iron: The demand for South African coal improved from sponge iron sector in March as complete switch from imported to domestic coal is impossible due to the kiln design, high ash and low CV properties of domestic coal. Also, thermal coal stock at Indian ports depleted by 15% m-o-m basis in March triggering demand for imported coal.
Adani Enterprise was the top importer of South African coal at 0.48 mn t followed by Reliance Industries at 0.25 mn t.
Power: India’s power consumption rose by 23% m-o-m in March and stood at 123.2 BU (billion units) against 104.7 BU in Feb’21 as per the official data, which justifies the country’s increase in Indonesian coal imports during the month. The sharp rise in temperature and Covid vaccination programme that led to increased economic activities in the country resulted in improved power demand and consumption.
Cement: The cement sector buyers that had been preferring Australian amid Chinese ban on Australian coal, took a step back in March due to its increased prices triggered by poor weather led closure of Newcastle port and Hunter valley rail lines.
SEMB Gayathri Corp was the top importer of Australian coal at 0.0.28 mn t in Mar’21 followed by JSW Energy at 0.13 mn t.
Outlook:
India has been hit by second wave of COVID which has led to restrictions and lockdown in various cities, hampering the economic activities. Thus, importers of South African coal are now focusing on imports for May and June shipments. There are very limited inquires for Australian coal because of its increased prices which means, its imports for April month are also likely to remain subdued. In case of Indonesian coal, rising prices due to increased demand from China and poor weather conditions in Indonesia, are keeping Indian buyers to the side lines.
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