Coal news and updates

Imported coal to be preferred due to 5% variable cost

Indian coastal power plants may prefer using imported coal “for now” despite higher availability of domestic coal because of continued advantage of the variable cost of around 5% over former, India Ratings & Research, a Fitch Group company, has said in its latest report.

According to the India Ratings’ report, at the current prices of domestic coal and imported coal, the variable cost per unit for domestic and imported coal is Rs 1.5/kWh and Rs 1.43/kWh respectively.

These prices have been arrived at on the basis of an exchange rate of Rs 68/US$ and domestic coal from Mahanadi Coalfields or Singareni Collieries. The domestic coal’s GCV has been kept at 3,550kcal/kg while the landed cost of imported coal has been considered at US$40/ton and the imported coal’s GCV has been considered at 4,200kcal/kg and the station heat rate at 2,300kcal/kWh.

“We do not expect any material change in these rates for now and imported coal might already be preferred over domestic coal by some coastal players. Imported coal prices are likely to remain subdued in the near term as demand in the Asian markets is not likely to pick up,” the report said.

It added that forex movements may nullify the decrease in coal prices to an extent.

The HBA, Indonesia’s coal price reference index, has decreased 17% since December 2014. However, the exchange rate has depreciated by 6% since December 2014, leading to a net 12% decline in imported coal prices, it said.