Coal news and updates

Is it the right time to book imported coal cargo?

September 16: With international coal prices practically at “rock bottom” levels, many in the industry feel this is an ideal time for Indian consumers to book imported coal cargo as prices will strengthen once again in the coming days, feel a majority of industry sources contacted by ICMW.

Demand from Indian companies is likely to go up in the coming months as the domestic industry is exhibiting signs of revival which might lead to higher enquiries for imported coal, particularly from the cement sector, they feel.

“There are clear indications of increase in enquiries from Indian companies from October-November and, coupled with expected increase in enquiries from China, coal prices are expected to harden in the coming days if nothing untoward happens,” according to them.

“It is a good time to take position as prices are at rock-bottom and from here they can only go up,” they added.

In support of their argument, the sources said, “The overall economic situation in India generally improves after the monsoons, which means there would be good demand for steel and cement from consumers. If that is the case, the demand for coal too would increase and there would be higher enquiries. So, in the current situation, if someone takes position on imported coal, the chances of incurring losses are limited.”

In addition, a number of Indian companies like NTPC, KPCL and many cement companies are set to place orders for imported coal within the next few days which will lead to an inflow of orders and, consequently, a firmness in prices, they added.

However, a section of industry officials feels it is difficult to take a call at current levels because the market has been stagnant for last more than 15 days.

“We are observing the market trend, which is stagnant for the last more than 15 days. It is difficult to predict which way the market will move but, going by the price trends, it can only be said that prices will go up from these levels,” said the official.

Incidentally, South African (6,000 Kcal NAR) prices are moving around $71 per ton since August 29 and the situation is similar with Australian steam coal prices which are moving around $76 per ton.

Even high calorific value Indonesian coal prices are also more or less stagnant at $68.50 for 5,900 Kcal GAR and $57 for 5,000 Kcal GAR, while the prices of low calorific value material 4,200 and 3,800 Kcal GAR have softened a bit following the imposition of the 3% import duty by China on lignite or low calorific value coal.

“I do not think Indonesian low grade coal prices would soften further because the impact of the increase in duty by China has already been discounted to a large extent and in such a situation creating positions on imported coal could turn out to be a wise decision,” said a leading consumer.