India: cement industry demand raises coal imports

The demand for coal with a high calorific value, primarily from the cement sector, combined with the doubling of clean environment cess has resulted in a shift in coal imports into India.

Steam coal imports have been declining in the April-June 2016 quarter due to higher output of domestic mines, but the key shift relates to the origin of the imports. While Indonesia has accounted for the majority of coal imports, in the 1Q16-17 import growth of coal sourced from this Asian country has remained almost flat YoY at 0.85 per cent to 23.4Mt. Steam coal imports from South Africa, the second-largest supplier, have experienced a 56.9 per cent YoY jump to 9.26Mt in the quarter from 5.9Mt. In addition, steam coal imports from Australia, the country’s regular supplier of coking coal, have also increased from 124,820t in April-June 2015 to 686,990t one year later.

"The doubling of the volume-based clean-energy tax in February increased the demand for high-caloric-value coal as evident from increased imports from South Africa and Australia at the expense of low-grade Indonesian coal," Fitch Ratings said in a report. South African coal is generally in the range of 5500-6000kcal with a low sulphur content while Indonesian coal has a lower calorific value of 4000-4500kcal and includes more impurities, according to a cement industry.

"Indonesian coal miners benefited less because India, which purchased 37 per cent of Indonesian coal exports in 2015, is pushing to become more self-sufficient in the commodity. Clean-energy tax hurt demand for Indonesia's low heat value coal. India has also increased imports from South Africa, which exports coal of higher energy content," the research firm said in a statement.