ReutersMove could propel global coal prices to new highs
Move could propel global coal prices to new highs
Three of India’s most industrialized nations plan to import 10.5 million tonnes of coal in the coming months as officials scramble to avert widespread power outages, a move that could push global coal prices to new highs.
The scale of the purchases and the decision to roll back a plan to cut coal imports underscore the depth of India’s fuel crisis. Utilities’ coal stockpiles are at their lowest pre-summer levels in at least nine years, and power demand is expected to rise at its fastest pace in at least 38 years.
Maharashtra plans to import 8 million tons for “blending purposes,” while Gujarat will place orders for over 1 million tons next week, state energy officials told the federal government on April 13, according to minutes of the meeting verified by Reuters.
The head of the government-run utilities of Tamil Nadu said the state is aiming to import 20% of its coal needs, adding that it had already placed orders to import 1.5 million tonnes, according to meeting minutes.
The three states are among the biggest power guzzlers in the country and together will cover almost a third of India’s electricity needs in 2021.
Concrete details on the import plans of the states have not yet been reported. Cumulative imports projected by just the three states would be higher than annual imports from state utilities for blending in at least six years.
The move by India, the world’s second-largest coal importer, could lead to a further rise in global prices, which are already trading near record highs on fears of a supply crisis following the European Commission’s decision to ban coal imports from Russia following its invasion of Ukraine .
Coal miners in South Africa, Australia and Indonesia are likely to be the main beneficiaries of India’s spending spree, although these producers are already overwhelmed by the recent surge in demand.
Russia is also a possible source of supply, but costs are already high and buyers are likely to be pushing for discounts, two traders said.
Bottlenecks, increasing demand
The Indian federal government has also asked the governments of the states of Karnataka, Uttar Pradesh, Madhya Pradesh, Punjab and Haryana to import a total of 10 million tons of coal.
While Punjab has pledged to import 6.25,000 tons, the other states have no detailed plans, minutes of the meeting showed.
Maharashtra’s expected 8 million tonnes of coal imports will add to the 2 million tonnes already on order, which is expected to be delivered on May 8th.
India had previously asked state government-led utilities to import 4% of their coal needs for blending, but last week proposed increasing imports to 10% of the amount needed to meet rising electricity demand.
The federal government-run NTPC Ltd., the country’s largest electricity producer, plans to boost coal imports to the highest level in eight years, Reuters reported last month.
Many Indian states including Andhra Pradesh in the south, Maharashtra in the west and Haryana, Punjab and Rajasthan in the north are already facing power cuts.
Power utilities in Tamil Nadu have an average of less than two days of rolling stock of coal left, while power plants in Maharashtra and Gujarat average around five days. Federal guidelines recommend that states have a minimum of 24 days in stock.
Officials have also decided to invoke an emergency clause in the country’s electricity law to allow currently idle power plants designed to run on imported coal to pass higher costs on to distribution companies.
The move would ease operations at plants operated by Adani Power, Essar Power, CLP India and IL&FS Tamil Nadu, which have severely curtailed electricity production due to high global prices, minutes of the meeting showed.
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