Power demand to boost India coal imports during monsoon

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 May 2009

Strong demand for power in India is likely to keep coal imports at the maximum level possible in the June-September monsoon season, Indian coal importers said. In January importers said they expected India to import over 40 million tonnes of thermal coal in 2009 but the total could be higher if imports do not slow substantially as usual during the monsoon.
"Coal consuming sectors such as cement and sponge iron are fairly stable right now, they have good demand but also have built stocks before the monsoon. What will keep imports high is the power sector. We are getting very strong demand from power plants for the summer," an India-based trade importer said.
China's surging imports of coal and iron ore have been a much more noticeable factor boosting prices in Asia as well as freight rates, shipping analysts said.
"India's import demand has been more of a focus in coal than in freight where everybody's attention is on China because of the scale of what China is doing," one London-based shipping analyst said.
He added that Indian coal demand is going on steadily in the background.
Indian end-users and stock-and-sale traders have already built stocks of coal at ports ahead of the monsoon but further imports will be needed to meet demand through the summer, traders said.
There has been no fall in the level of enquiries from Indian buyers for summer delivery South African, Indonesian, Australian and to a much smaller extent Russian coal, producers and traders said.
Indian buyers are carefully comparing prices of different coal origins and switching to South African from Indonesian supplies when they are cheaper but the volume of coal sought per month is little different to that in Q2, suppliers said.
Indian trade buyers said they are seeking any coal which can be delivered to India for less than $70.00 a tonne CIF, a price acceptable to their end-user power plant clients.
This has mostly been South African during the past few weeks but traders Glencore sold around 10 cargoes of competitively-priced Indonesian coal last week to several Indian buyers, Indian traders said.
"There won't be a noticeable slowdown in imports during the monsoon. That is a myth. Every port which can be used will be taking in coal, few ports cannot operate," another Indian market source said.
The west coast ports are more affected by severe weather resulting in high seas which makes it dangerous to berth and unload vessels, traders said.
But the majority of west coast ports will continue to operate as normal this year, they said. Kandla and Magdalla are among the few which will be severely affected. Goa will also slow operations, they said.
East coast coal ports such as Kolkata, Paradip, Vishakapatnam and Chennai will continue to work close to normal levels, they said.
India has a power generation capacity of about 146,000 MW but supply lags demand by up to 16 pct in peak hours and a rash of state-owned and private power plants, mostly coal-fired, are being built to fill the gap.
India's domestic coal production is insufficient to meet demand, making the country increasinly dependent upon imports.

Source: Reuters