It has come as a surprise to some in the coal sector that for the third consecutive month, India’s coal imports are set to drop in October.
News agency Reuters reported India’s seaborne imports of both thermal and coking coal were on track to be about 13.3 million tons this month, according to vessel tracking and port data compiled by Refinitiv.
The development has caught some experts off guard given the fact that India’s largest producer, Coal India, has seen industrial action in some of its operations and the flooding of a major mine.
By the end of October, analysts believe India’s import figure is likely to go up. Even if October imports do exceed the current estimate, it’s likely they will still fall short of the 15.3 million tons of September, which was down from 15.9 million tons in August.
Like their global counterparts, Indian steelmakers are dependent on coal for making steel. India is dependent on imports of coking coal, as there is not enough indigenous coal to meet domestic demand (India’s total coal reserves are about 260 billion tons).
India imports coal from countries like Australia, Canada and the U.S. The import figures through July this year were 8% higher as compared with the same seven-month period in 2018.
Because of strikes, Coal India said its output was down by 13 million tons, or 2.1%, of its annual output this financial year.
To add to the coal producer’s woes, an unusually high and largely devastating monsoon season has stopped production at a major coal mine in the Chhattisgarh province, exacerbating the overall coal production shortfall.
In the last days of September, a river here suddenly changed its course, flooding the Dipka coal mine in Korba district, Quartz India reported. Incidentally, Chhattisgarh produced the highest quantity of coal in the country in financial year 2018-19.
Recently, India became the second-largest destination for seaborne coking coal after China, which was about 13% of global demand in the spot market.