)
India's coal import is set to go up significantly in the next financial year, with the estimate for 2015-16 at 220-240 million tonnes, against the current year's projected import of 185-190 mt. In 2011-12, it was a little over 100 mt.
However, the trend of continuously falling prices should keep the bill under control. Despite the rising volume, the annual import bill stayed around $17 billion over FY12 to FY14. In the current financial year (starting April 1) till August, it was $7.2 bn. ICRA has projected the full year's bill around $15 bn. For FY16, the volume could rise 15-20 per cent. With prices likely to remain under pressure, ICRA feels the bill might be around $18 bn.
Recently Supreme Court cancelled 200-odd coal block allocations and these are to be auctioned. Simultaneously, new power capacities would be commissioned in FY16. Together, these developments will add to coal demand and this will have to be met through higher import. However, coal prices are already lower by 20 per cent from a year before.
Jayanta Roy, senior vice-president and head of metals and mining at ICRA, said: "Imports are expected to increase sharply in 2015-16. Almost 30 mt of the increase will be because of the expected commissioning of new power capacities. If there is a delay in auctioning of operational or soon-to-be operational blocks, which are 42 in number, then more might have to be imported."
These operational blocks are estimated to be producing 53 mt a year. ICRA estimates total coal imports in FY16 at 220-240 mt.
Sapna Dogra, associate editor at Platts, the leading global watchdog on energy trends, qualifies the likely rise in import this way: "Since the cancellation will take effect after six months, by March 31, 2015, it is only in the next (financial year) that the actual impact could be seen. But Indian buyers are looking for imported coal, as state-run Coal India has been unable to meet the growing demand. In the near to medium term, the situation is unlikely to change because infrastructure has to improved. Imports have also gone up recently as Coal India reduced its e-auction volumes to around 35 million mt and several cement, sponge iron, steel, cement and even some power companies have been looking at imported coal."
Last year, coal prices fell about nine per cent. As mentioned earlier, this year they have fallen 20 per cent.
At present, there is congestion at the ports and lesser availability of railway rakes for transporting coal.
Dogra feels, "With China implementing several import restrictions, including an import tax, prices are likely to remain subdued. There is no visible catalyst that could push up prices in the near to medium term."
Says Jayanta Roy of ICRA, "We expect the pressure on prices to remain in the short to medium term, as China is slowing, while fuel usage dynamics are changing in USA at a time when the market has enough supplies. Therefore, even if India's imports increase further, prices are unlikely to be affected significantly."
