India: Monsoon procurement lifts thermal coal imports by 28% in Apr'21

India's thermal coal imports rose 28% month-on-month (m-o-m) to 16.2 million tonnes (mn t) in Apr'21 as against 12.7 mn t in Mar'21, CoalMint's vessel line-up data revealed.

Indonesia continued to be the top exporter of thermal coal to India at 9.6 mn t in April as against 7.07 mn t in March. Imports from South Africa rose slightly to 2.7 mn t last month from 2.6 mn t in March, while imports from Australia rose 17% m-o-m to 1.5 mn t in April.

As per the sector-wise thermal coal imports in Apr'21, power and cement registered a m-o-m increase in imports of 3% and 79% respectively, while coal imports for steel and manufacturing sectors fell drastically by 13% and 32% respectively.

Importers resume bookings ahead of monsoon

After witnessing weak demand conditions in March, trading activity especially for Indonesian coal gained momentum in Apr'21 when importers brought in vessels to help buyers stock up coal before the monsoon season. Generally, buyers prefer stocking up during the summer months of April and May.

However, the rising Covid-19 infections in the country since the beginning of April started denting economic activity as several manufacturing units went back to work under minimum load like last year and also had to reduce their capacity utilisation to deal with labour shortage and decline in industrial oxygen supply.

The escalated freight charges and risen South African coal prices prompted several small manufacturers to switch to domestic coal alternatives, thereby capping a sharp rise in the imports from the country.

Sector-wise demand scenario

Sponge iron: Demand for South African coal from sponge iron sector remained capped due to increased availability of domestic coal.

Power: India's power consumption grew 41% year-on-year (y-o-y) in April at 119.26 billion units (BU) as per official data which justifies the rise in Indonesian coal imports. Recovery in industrial and commercial demand for electricity also supported the rise in Indonesian coal imports.

Cement: The government's huge pipeline of infrastructure projects prompted Indian cement players to resort to a 79% m-o-m increase in coal imports. Though several states went under lockdown during April, demand from the rural areas and projects such as the Bharat Mala, Mumbai-Nagpur Express Highway, and Housing for All supported cement demand.

Outlook

As per CoalMint's analysis, the rising Covid-19 infections in the country and the subsequent restricted economic activity are likely to keep thermal coal imports under pressure in May. Buyers are seen adopting a wait-and-watch policy amidst the rising index and skyrocketing freight rates.