Weak rupee and demand slump pull down India's coal import growth

A weak rupee coupled with demand slump has pulled downcoal imports by India -- the third-largest importer behind China and Japan --to a mere 16% in the current financial year so far. 

 

The country imported 131 MT between April and January this fiscal as compared to 112 MT in the same period previous year.A Business Standard analysis of the month-wise data of shipments shows imports grew by over 30% in the first half(April-September) but nose-dived later partially easing a widening Current AccountDeficit (CAD) but depriving companies of benefits of depressed global prices. The 16% rise in imports in the April-Jan period led to a total foreign exchange outgo of close to Rs 56,588 crore, a 27% jump against Rs 44,539 crore in the same period previous year.

The analysis is based on an average coal price of Rs 4,300 per tonne (5,500 Kilocalorie Indonesian coal landed atVizag port) this fiscal, an 8.9% increase over the average price of Rs3,945 per tonne last year. 

 

Indonesian coal accounts for a bulk of India’sthermal coal imports of around 110 MT annually. Another 25 MT of steel-makingcoking coal is imported largely from Australia and South Africa. Overallimports are likely to go up to 150 MT this fiscal. Analysts believe the muted growth in boththe volume of imports and the global prices this year so far have kept imports,and the associated foreign exchange outgo, under check.

However, the effect ofthe two factors was partially offset by the rupee depreciation. “The Rupee had touched 65 mark againstDollar last year. Since then, the USD to INR rates have stabilised around 62,which is still high for imports to pour in. Already, the impact was visible as the January 2014 imports were justabout 9.16 MT, about 33 % decline Year-on-Year. 

 

For 2013, imports were just shy of 158 MT, still about 11 % higher from the previous year,” said Kalpit Dubey, analyst at commodities research firm OreTeam. India’s coal production grew at a sluggish3.3% to 557 MT last financial year (2012-13), thanks to delayedenvironmental clearances for new mines and the failure of captive miners toramp up weak rupee and demand slump pull downIndia’s coal import growth to 16% current fiscal; Imports pushed forex outgo 27% to Rs 56,588 crore