According to the data compiled by CoalMint Research, Indian coal imports have fell 3% Y-o-Y to 215.42 MnT (including Pet coke imports) in CY17, against 223.21 MnT in CY16. Imports had fallen for the second successive year, amid the progressive increase in country’s domestic coal production.
Coal has been crucial to the country’s growing economy, finding its application in power generation, steel making, cement industries and others. Accordingly, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per the contractual prices on payment of applicable duty.
However, to reduce coal import, India’s domestic coal miner, CIL, had taken steps for promotion of import substitution through source rationalisation with part supply from higher grade coal sources.
What Happened in CY17?
Coal Import in India, is based upon the purpose for which it is used by a specific industry.
Non-coking coal constitutes the major portion of India’s total coal imports, which is dominantly used by Power producers. Import of this coal grade had fallen 6% on the year to 156.14 MnT in CY17 compared with 146.35 MnT in CY16.
Import figure could have been much lower in CY17, but following the sequence of events that had led to domestic coal crunch; the country had registered higher imports in the latter period of CY17.
Given the shortage of coal in power plants, CIL was forced to augment coal supplies to the power stations thereby regulating the coal supplies of the Non-power sector. As a result, higher imports were seen during Sep’17-Dec’17, both from the power and Non-power sector.
On the other hand, imports of Coking coal, majorly used as a raw material in Steel making, had increased 10% Y-o-Y to 51.32 MnT in CY17, on enhanced steel production in the country.
Anthracite coal imports too had increased 39% Y-o-Y to 0.88 MnT in CY17. Imports of both Met Coke and Pet coke had decreased in CY17.
What May Happen in CY18?
Indian coal imports are expected to remain low in CY18, as the domestic coal supply has improved since the aftermath of the shortage that had arise in Aug’17, that would eventually limit the demand for imported coal.
Following are some of the factors that may also result in the decline in imported coal demand:
1. Improved Domestic coal Supply: With the increased coal production in recent months, and comparatively better stock position in power plants, CIL had augmented coal supplies to the Non-power sector as well.
2. Better Planning of Monthly Coal Production: With a better stock position in hand at the end of the FY18, CIL could co-ordinate its monthly coal production in a better way in CY18. Unlike previous year’s condition, when the coal company had to limit its monthly coal production due to the surplus coal stock.
3. More Coal Offered in Open Market: Coal users that have not been signed FSA (Fuel Supply Agreement) with CIL, were forced to meet their coal demand from import market.
However, with the enhanced coal supply, CIL could offer more sales of coal through the spot auctions.
4. Investments in Logistic Projects: Coal transportation has received major boost with the commissioning of two major rail infrastructure projects- Tori-Balumath section in Tori-Shivpur division and the Jharsuguda-Barpali-Sardega section.
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