In a recent twist to the coal market in India, demand for USA coal has gradually started rising, and the underlying reason is: the prospect of a restriction or ban on usage of Petcoke in the country in the near future. If the market speculation is considered a potential indication, then demand for USA coal could be expected to rise substantially in India in the near future.
With the National Green Tribunal (NGT) recently taking a slew of measures to restrict usage of Petcoke in the country for countering the atmospheric pollution caused by burning of the fuel, the Petcoke users have found themselves in a tizzy state.
In the initial phase, the NGT in the last month had directed all the industrial units using Petcoke without permission for using the fuel to close down with immediate effect, and for the units using the fuel with the requisite approval, the NGT had allowed these units to continue using Petcoke for a period of two months, after which these will have to abide by a policy to be framed for using the fuel in the country.
At the same time, the NGT had also asked the Ministry of Environment, Forests and Climatic Change and the Central Pollution Control Board to jointly form a committee to study the harmful effects of burning Petcoke. Also, the state governments in the country were asked by the tribunal to decide within the two-month time-frame whether Petcoke is an approved fuel or not according to the existing environmental laws.
The emission of Sulphur during burning of Petcoke is the factor behind causing atmospheric pollution by the usage of the fuel. Sulphur is one of the key constituents of Petcoke.
Subsequent to the NGT announcing its directives, there has been a buzz in the market in the country that most Petcoke users were turning their focus towards USA coal. If the prevailing market sentiment is considered as an indicator,then imports of coal into India from USA are likely to rise substantially in the coming days as demand for the coal will strengthen in the country, predominantly from the Petcoke users.
The spontaneous question that arises in this regard is: why the affinity has shifted towards USA coal, and not for coal from the other prominent regions, like Indonesia, South Africa or Australia? The answer is: USA coal is superior to coal from the other regions in terms of the calorific value; and is thus a potential substitute for Petcoke. The GCV of USA coal normally lies at around 72,00 GAR; and that for Petcoke lies at around 76,00 GAR. Moreover, coal from USA is 100% washed, and is thus free from impurities. Besides, there are other advantages of USA coal.
Source: CoalMint Research
According the Director of Anmol India Limited, a reputed coal trading company in India, USA coal is currently offered at around USD 80-82/MT CFR India.
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