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Coal to remain prominent as India's power demand grows: Coaltrans speakers

Singapore (Platts)--14 Feb 2018 536 am EST/1036 GMT


India's coal demand is expected to stay high with electricity generation capacity forecast to grow, speakers at the Coaltrans India Conference in Goa said Tuesday.

The power electricity demand and generation is expected to grow by between 5% and 10% from current levels over the next few years, said Vipul Tuli, chief executive and country head of Sembcorp India.

"The country is electrifying at a good rate with a lot of focus now on household electrification," Tuli said, adding that power generation could increase at the rate of 10 GW to 25 GW in the medium term above the current capacity of 200 GW.

"Coal will remain very important to meet the base load needs as renewables, despite dropping prices, have not reached grid parity as yet," he said.

The volume of coal imports into India depends on the landed price, according to end-user sources.

The market consensus was that demand drops drastically when the CFR price of 4200 kcal/kg GAR coal grade crosses $55/mt.

India's thermal coal imports in 2016 and 2017 showed diminished appetite for seaborne cargoes as prices have gone up.

Imports fell to a low of 9 million mt in November 2016 when the price was close to $50/mt FOB for 4,200 kcal/kg GAR due to China's 276 mining days rule that limited domestic supply leading it to import more cargoes of seaborne coal, according to S&P Global Platts data.

India's imports continued to decrease towards the fourth quarter of 2016 as buyers waited for a price correction. But fast depleting stocks forced them to return to the market.

In early 2017, there was a spike in Indian buying when prices started to edge down after China returned to 330 mining days, easing the supply tightness. Indian imports remained erratic in 2017. They rose in Q2 to over 13 million mt, plunged in August to below 9 million mt. In September, Coal India Limited's production was affected by the monsoons and imports rose again.

Meanwhile, on the domestic front, the idea of coal miners turning into electricity producers could gain some traction soon, according to a speaker at the conference on Tuesday.

"Indian coal miners will gradually transform into power producers like in the case of Neyveli Lignite Corporation," said V.K. Arora, chief mentor at Karam Chand Thapar & Bros, a major coal trader in India.

"Coal miners becoming power producers allow coal to be used at cost price for power generation," he added.

--Shriram Sivaramakrishnan, shriram.krishnan@spglobal.com --Mia Corazon Aureus, mia.corazon.aureus@spglobal.com

--Edited by E Shailaja Nair, shailaja.nair@spglobal.com




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