India’s building boom fuels coal rush

India’s building boom fuels coal rush
Published: 19 February 2007

Soaring demand for cement to feed India’s construction boom is forcing the country’s cement makers to import much more coal, driving up prices in South Africa as cheaper alternatives dry up. 
Coal, together with lime, is commonly used for making cement and it also provides heat for the process.  
India has domestic reserves of coal, but a surge in construction work has made it increasingly dependent on imports.  
"We estimate, on average, that there’s been a rise of 10-15 percent in demand for cement in every state in India over the past several months," said an Indian coal importer.  
"The price of cement has doubled and this means the manufacturers can afford to buy imported coal in greater quantity, and they have to, because there is not sufficient supply of domestic coal at present."  
The Indian cement sector prefers to use low moisture content coal with as high a calorific value (C.V.) per kilogramme as possible, importers said.  
Cement-makers usually buy imported South African, Chinese and high-quality Indonesian coal, which some of them blend with the high-ash, lower c.v. domestic material.  
But almost no Chinese spot coal has been available for the past few months because of high demand in China.  
This had already prompted importers to seek more South African coal instead.  
Some cement makers have become more flexible and have used cheaper, lower quality coal, but in recent weeks even supplies of lower quality coal from Indonesia have become tight.  
A declaration of force majeure this week at Bontang port in Indonesia has aggravated the situation.  
"Everyone is scurrying around trying to divert their ships and pick up whatever alternative Indonesian cargoes they can," said a senior executive at trading company Coal and Oil, one of the major importers of coal into India. 
Another importer said he had bought cargoes from South Africa, which had risen in price from from $49 a tonne four weeks ago to $53 on Thursday.  
"We have bought several cargoes of South African coal in the past four weeks to cover what we need to supply our customers in the cement and sponge iron sectors until the end of April," he said.