At 35%, Indian coal imports rise at the fastest rate in 42 months

India's thermal coal imports rose at the fastest pace in three-and-a-half years in the September quarter, spurred by new demand and domestic infrastructure bottlenecks that are threatening government plans to cut foreign supplies.

Imports jumped 35 per cent to 42.7 million tonnes during the three months ended Sept. 30, according to data from American Fuels & Natural Resources, a Dubai-based trader of coal from the United States which tracks coal shipments around the region.

It was the fourth straight quarterly rise in coal imports and puts the energy-hungry nation on track for a rise in annual imports after two straight years of decline.

 

For the first nine months of 2018, imports of 124.6 million tonnes are up 20 per cent from the same period a year earlier.

The American Fuels figures for the September quarter were in line with data from consultancy Wood Mackenzie, which estimated imports at 42 million tonnes during the period.

The rise in imports is being driven by fresh demand for thermal coal, say industry executives and traders.

"We are seeing a surge in demand from the steel industry, and the petcoke consumption and import restrictions have led cement plants and a large number of smaller industries to shift their energy mix to include coal," said Puneet Gupta, founder of online coal marketplace CoalShastra.

India last year put restrictions on the use of petroleum coke, or petcoke, a highly polluting fuel derived from processing fuel oil into fuels at oil refineries.

The increase in coal imports adds to the woes of Prime Minister Modi's government, which has been facing criticism for the growing trade deficit and a weakening rupee.

The value of India's coal imports jumped 38 per cent to 1,385 billion rupees ($18.9 billion) for the year ended March 2018, government data showed.

Despite an abundance of local coal, traditional users of Indian coal such as coal-fired power plants are struggling with fuel shortages due to infrastructure issues hampering access to Indian supplies.

Of the 123 coal-fired utilities with coal linkage contracts, 68 plants have three or less days of coal stocks left, according to government data dated Oct. 23.

Indonesia made up three-fifths of India's thermal coal imports, while South Africa accounted for about a quarter and the United States 7 per cent.

Adani Enterprises, India's largest coal trader, accounted for about 11 per cent of all the imports during the period. The ports of Mundra, Krishnapatnam and Kandla handled about 43 per cent of all of the imports, according to American Fuels.

Adani did not respond to a request seeking comment. The company said in July it expected a "reasonable rise in imports" until the fiscal year 2021 due to "rail transportation challenges".