Rise in import costs helps Coal India shrink stockpiles

epa05073769 (FILE) A fiile photo dated 30 January 2015 showing an Indian labourer making coal chips at a local coal workshop in eastern Indian city of Calcutta. Demand for coal has stalled after more than a decade of consistent growth, the International Energy Agency said 18 December 2015, attributing much of the slowdown to declining demand in China. In its annual coal report, the Paris-based agency said it had cut its five-year forecast for demand growth by 500 million tonnes of coal equivalent, which represents energy generated by burning a metric tonne of coal. Economic restructuring in China, which represents half of the world's coal consumption, and a new climate agreement brokered in Paris are largely responsible for the decline, the agency said. EPA/PIYAL ADHIKARY

 

Bloomberg

Coal India Ltd, the world’s biggest producer of the fuel, sees rising international prices helping it shrink swollen stockpiles and gain more buyers as domestic customers shun imports in favor of local supplies.
Increasing Australian and South African prices have made imports more expensive, which may boost demand for domestic coal, said Marketing Director SN Prasad. Thermal coal in Australia jumped about 25 percent in the past two months, while South African coal prices rose about 15 percent during the period, buoyed by production cuts and a recovery in imports from China, the biggest consumer.
“The bounce-back in international prices is a good omen for us,” Prasad said. “If the trend continues, we could see several customers switching from imports to us.”
The Kolkata-based miner is seeking to tap new customers to cut inventories at its mines after production grew faster than demand. The company reduced prices of higher grade coal in May to compete with imports and woo back customers. The increase in imported prices will complement that effort, said Goutam Chakraborty, a Mumbai-based analyst at Emkay Global Financial Services.
The state-owned company’s production in the three months ended June 30 rose 3.5 percent to 125.65 million metric tons, compared with a 2.9 percent growth in shipments to 133.19 million tons. The miner, which controls more than 80 percent of the nation’s coal production, has managed to reduce inventories to around 46 million tons from about 53 million a couple of months ago, according to Prasad.
Coal India is also in talks to ship coal to Bangladesh in what could be its biggest overseas deal, Prasad said. The company is looking to supply coal to a 1,320 megawatt power plant that NTPC Ltd. plans to build in that country.

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