Rise in African coal im­ports

Resource Digest - - CONTENT -

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.

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