According to the data provided by South African customs, Indian coal shipments from South Africa have increased 16% on the month in Apr’18.
Apparently South Africa’s coal export in Apr’18 was down 9% M-o-M to 6.86 MnT against 7.53 MnT in Mar’18. However, the country’s coal exports to its largest customer, India, had increased to 3.41 MnT in Apr’18 against 2.94 MnT in Mar’18, which was also the highest monthly total for CY18.
Indian coal imports are particularly high during Apr-May period, to cater the pre-stocking demand before the start of monsoon season. But, import in Apr’18 was still 3% lower on the year compared with 3.51 MnT in Apr’17.
India’s total coal import during Jan’18-Apr’18 period stood 11.64 MnT, with an increase of 7% Y-o-Y from 10.9 MnT during Jan’17-Apr’17.
Rise in Coal Offers Hurting Indian Buying Sentiments:
South African coal is of great interest to Indian Non-power sector viz Cement and Sponge Iron industry. However, the rising coal offers have coal have kept Indian buyers at bay, who are now waiting for correction in coal prices while evaluating the alternatives to the South African coal.
An Indian trader had commented that Cement manufacturers were catering their demand from US and Indonesian coal, whereas Sponge Iron plants had no option than to procure South African coal to carry out their operations.
Sponge Iron manufactures generally prefers South African coal as it provides higher Fixed Carbon to Volatile Matter (FC/VM) ratio which is needed for uniform burning and temperature control in sponge kiln.
However, in the wake of the increase in coal offers for South African coal, sponge manufacturer’s buying sentiment is likely to get affected as many of them have claimed the current offers were too high and not viable for sponge iron production.
Prevailing supply tightness has kept South African 5500 NAR coal offers elevated this week, which were assessed at USD 90-91/MT on FoB basis.
Adding fuel to the non-power sectors coal concerns, CIL is again seemed to be favouring the power producers for coal supply. Earlier, market reports had claimed that Vedanta resources was facing shortage of coal at its Aluminium smelter, as MCL had halted deliveries to all non-power customers following a government directive to prioritise the power sector. Moreover, various steel makers have also raised their voice against lack of rake availability for iron ore movement.
It will be interesting to note how CIL’s coal production and offtake are scheduled in the coming months, as the fall in domestic coal supply had incite higher demand for South African coal last year.
Following the domestic coal supply cut in FY18, Indian coal imports from South African had increased 24% Y-o-Y to 14.07 MnT during Sep’17-Dec’17, compared with 11.38 MnT during the corresponding period of last year.
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