Rise in African coal imports
Coal imports from South Africa are increasing, while they have barely risen from principal supplier Indonesia as a result of high demand for quality coal. Steam coal imports from South Africa have seen a 56.87 per cent jump in the first quarter of 2016- 17; supply from Indonesia, which constitutes the bulk of the imported coal, is almost flat.
Overall imports have been on a decline because of an increase in domestic production. Commerce ministry data on inbound shipments of steam coal show that India has imported 9.26 million tonnes ( mt) in the April- June quarter of 2016- 17 compared with 5.9mt in the same period a year ago from South Africa, the second- largest supplier.
Imports from Indonesia rose only 0.85 per cent to 23.4mt during the same period. Even steam coal imports from Australia, a major supplier of coking coal, were high during the quarter.
Analysts and industry observers said the demand for coal with a high calorific value, especially from the cement sector, and the doubling of clean environment cess had resulted in the shift in to countries such as South Africa and Australia.
"The demand for coal with high calorific value is mostly coming from cement manufacturers who use a mix of both coal and petcoke in the production process and petcoke prices have been increasing lately," an industry source said.
South African coal is generally in the range of 5500- 6000 kilo calorie and has low sulphur content compared with the Indonesian variety. Indonesian coal is of lower calorific value of around 40004500 kilo calorie and has more impurities, the source added.
The clean energy cess has been hiked to Rs 400 per tonne from Rs 200 per tonne, which is also adding to the cost of imported coal.
Indonesian coal, though cheaper, has to be consumed in large volumes because of its low calorific value.
"The doubling of the volume- based clean- energy tax in February increased the demand for high- caloric- value coal as evident from increased imports from South Africa and Australia at the expense of low- grade Indonesian coal," Fitch Ratings said in a report. "Indonesian coal miners benefited less because India, which purchased 37 per cent of Indonesian coal exports in 2015, is pushing to become more self- sufficient in the commodity. Clean- energy tax hurt demand for Indonesia's low heat value coal. India has also increased imports from South Africa, which exports coal of higher energy content," the research firm said in a statement.