India’s thermal coal imports in CY22 increased by 16% yo-y to 161.8 mnt, according to Coalmint data. Coal imports have risen this year despite global thermal coal prices touching all-time high levels. The highest rise has been recorded in imports from Indonesia and Russia.
Indonesia: India’s coal imports from Indonesia stood at 107.5 mnt in CY22 as against 74.23 mnt in CY21. Indian utilities imported more of Indonesian coal during the sultry summer season as the power ministry had directed state gencos (power generation companies) to import at least 10% of their total coal requirement for blending purposes. States were advised to place import orders by 31 May, 2022 so that the delivery of 50% quantity could be ensured by 30 June.
Indonesian thermal coal prices fell in April after touching their peak in March (due to the Russia-Ukraine war) in the absence of Chinese buying interest due to COVID-19 restrictions, thereby nudging Indian buyers to source more of Indonesian coal.
South Africa: Shipments from the country dropped by 21% to 20.7 mnt in CY22 compared with the previous year. South African thermal coal prices peaked in March before falling in the subsequent months but still remained elevated because of supply disruptions due to derailments and bad weather in South Africa. In addition, India’s sponge iron sector, the key buyer of South African coal, opted for cheaper Russian 6000 NAR and Australian 4600 NAR coals resulting in reduced demand for South African coal.
Australia: Imports from Australia fell by 45% y-o-y to 11.6 mn t in 2022. Indian cement buyers that had been buying more of Australian coal (5500 NAR) over the last two years (due to China’s unofficial ban on Australia coal) were back to using more of pet coke, resulting in the drop of imports. This was because the Russia-Ukraine war this year made Europe buy more of Australian coal in the absence of Russian coal due to sanctions, thereby pushing Australian coal prices to record highs and thus demotivating Indian buyers to buy from Australia. Only Australian 4600 NAR grade coal is being sourced by the sponge producers for blending purposes.
Russia: India’s imports of Russian coal rose more than three-fold to 8.43 mnt in CY22 compared to 2.35 mnt in CY21. Russian coal imports picked up as Indian sponge makers shifted to Russian coal in view of expensive South African coal. Also, in view of the Russia-Ukraine war, Russian cargoes increasingly found their way to Asian countries.
Outlook
India has been focusing on increasing its domestic production to ensure energy security. In fact, in 2022 the country’s domestic coal output increased by 12% y-o-y to 861.9 mnt. State-run CIL has outlined a plan to commence operations at two of its opencast coal mines that were allocated via global tenders under the mine developer and operator (MDO) mode. CIL’s ambitious plan to reopen its abandoned coal projects is gradually taking shape as a few of its subsidiaries have started finalising the tenders. Hence, Indian imports in the near future are expected to fall amid attempts to enhance domestic output.
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