The current global market scenario, wherein prices of coal and Petcoke are on the rise, seems to be raising the hopes of the Indian coal behemoth—Coal India Limited (CIL)—to achieve higher sales.
From a pure economic perspective, CIL is expected to have better sales in the coming days as prices of imported coal have risen by around 30% since Jun’16. Along the same lines, prices of the Fuel Grade Petcoke also have gone up to significant levels due to shortages in international markets.
On the demand side, consumption of the cement and steel sectors are expected to remain strong that indicates the sectors are going to opt for domestic fuel purchases on account of cost considerations.
As an example to substantiate the fact, the prevailing price differential between imported and domestic coal could be cited.
The current price of Thermal coal of 6,000 gross calorific value (GCV) are at around USD 65/MT, which amounts to approximately INR 4,348/MT; a similar grade of CIL’s coal is reasonably cheaper at around INR 3,000/MT.
In the meantime, the Government of India (GoI) is stressing for usage of domestic coal that is likely to prompt coal consumers in the country to opt for domestic coal in an environment in which imports are becoming costlier.
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