India's thermal coal imports stable at around 11 mnt in Jan'23

*Import volumes strong despite domestic production growth

*Shipments from Australia, Russia increase

*Imports may not rise sharply due to higher domestic output

India's thermal coal imports in January 2023 remained stable at around 10.8 million tonnes (mnt), as per Coalmint data. However, imports increased sharply by nearly 50% y-o-y compared to 7.33 mnt in January last year.

Demand outpaces supply

It should be noted that coal imports have been fairly strong despite the increase in domestic coal production. India's coal production increased by 10 mnt, or 13%, y-o-y to 90 mnt in January. Production witnessed m-o-m growth of around 7%. Moreover, in the first 10 months of FY23 (April 2022-January 2023), the country's coal production increased by 16% y-o-y to 693 mnt.

However, imports have surged despite growth in domestic production. India's coal imports increased by 15% in 2022 to 162 mnt despite growth in domestic production partly due to the government's mandate obligating operators of coal-based power plants to increase inventories by importing at least 10% of their coal demand and easing the restrictions on coal blending. Buyers also ramped up imports of sharply discounted coal from Russia.

India has been focusing on improving domestic coal production to achieve its FY23 target of 900 mnt. India's largest coal producer, Coal India Ltd. (CIL), saw a growth of 11% y-o-y to almost 72 mnt in January. CIL's production edged up by 8% m-o-m.

Country-wise imports

India's thermal coal imports from Indonesia stood at 4.30 mnt in January as against 6.24 mnt in December, down 31% m-o-m. Imports fell despite a 12% increase in domestic thermal power production in January. India imported around 107 mnt of coal from Indonesia in 2022.

Shipments from Australia almost doubled to 2.30 mnt as against 1.16 mnt in December. However, as many as three cyclones are expected to form in Australian waters this week and a potential fourth is in the offing in the next 10 days. Hence, Australian exports may get hampered in February. Also, more Australian coal may get diverted to China.

Shipments from South Africa were recorded at 1.41 mnt compared to 1.60 mnt in December. India's sponge iron sector, the key buyer of South African coal, opted for cheaper Russian 6000 NAR and Australian 4600 NAR grade coals resulting in reduced demand. Imports of Russian coal, on the other hand, rose to 820,000 t compared to 570,000 t in December. Amid sanctions Russian cargoes are finding takers in Asia.

Company-wise imports

Qty in mnt

Adani Enterprise recorded highest imports for the month at 1.83 mnt, down 20% as against 2.28 mnt in December. Agarwal Coal recorded a 31% monthly drop in imports at 680,000 t followed by JSW Energy at 570,000 t.

Port-wise imports

Qty in mnt

Krishnapatnam received the highest cargo volume of 920,000 t, followed by Kandla at 910,000 t. Navlakhi and Gangavaram ports received imports of 880,000 t and 740,000 t, respectively.

Outlook

The government has mandated that coal-based power utilities import 6% of their requirement to meet peak demand. But increasing domestic production has seen an overall rise in inventories at power plants. Therefore, even with power demand rising prematurely early this year, inventories are not at critical levels.

Moreover, state-owned CIL has ambitious plans of reopening its abandoned coal projects and few of its subsidiaries have started finalising the tenders. Therefore, imports may not increase significantly in the near term.

2^nd Asia Coal Trade Summit

The Indian government is committed to reducing long-term dependency on coal imports but will domestic supplies catch up with rising consumption levels? What are the import-substitution strategies being adopted? Will they yield near-term results? Join the conversation at CoalMint's 2^nd Asia Coal Trade Summit in Bangkok, Thailand from 24-25 April, 2023