Coal importers face huge loss as stocks top 11 MT

Tuesday, 15 Nov, 2011

NEW DELHI: More than 11 million tonnes of imported coal, enough to light up five cities as big as Delhi, are stacked at Indian ports for over four months as power producers refuse to buy costly coal despite acute fuel shortage.

The importers face huge loss as the depreciation of the rupee and the recent fall in international coal prices add to their woes. Industry insiders said coal stockpile at various ports reached record level as traders were initially not willing to sell the commodity at loss. Disinterest among power generating companies to blend imported coal that increases electricity tariff also led to the glut. Industry sources said traders under pressure from creditors wanted to sell quickly.

"About 11.57 million tonnes of coal is lying at the ports. The traders, mostly small and inexperienced ones, bought coal from Indonesia and South Africa at higher prices. But the traders are holding the stock as they would not even be able to recover the costs with the kind of purchase offers being received," a senior official in Bhatia International said.

Global coal prices have come down by $5 a tonne in the past few months due to slowdown in various economies.

Rupee fell to a two-and-half-year low of 50.42 against dollar on Friday on the back of weak industrial production data and a sliding stock market.

Deloitte director consulting (mining) Dipesh Dipu said traders would be in lurch as dollar has become expensive and rent and repayment charges add to the costs.

"The traders placed coal supply orders a few months back when the rupee was trading at about 43-44 to a dollar. When the coal landed at the ports, rupee had started to fall and was about 48 to a dollar. Today, they are receiving enquiries at about 7% less than the prevailing price," a senior official in Adani Enterprises said.

The coal at ports could meet about 70% of the imported coal requirement of the country's largest power producer NTPC that has 35,000-mw generating capacity. NTPC targets to import about 16 million tonnes of coal this fiscal.

A senior NTPC official said the company was blending 10-15% of imported coal at most of its stations, but there were no buyers for expensive power generated by burning imported coal.

Jindal Power's RS Sharma said this could be a good opportunity for power companies to procure imported coal at low prices, but there was no demand for costly electricity. He said blending 10% of the imported fuel rises electricity tariff by 35-40 paise. Cash strapped distribution utilities were resorting to load shedding rather than purchasing electricity.

A senior power ministry official said even if companies get imported coal at low cost, most private power producers did not have enough domestic coal to blend. Indian power plants can accommodate only up to 15% of imported coal that has to be blended with domestic coal.

(sourced ET)

Poor coal supply forces NTPC to reduce output in Bihar and West Bengal plant

Saturday, 08 Oct 2011

ET reported that inadequate coal dispatches have forced state run NTPC to slash output at two of its plants in Bihar and West Bengal, affecting power supply to parts of northern, eastern and western regions during the peak festival season.

Output at key plants has been falling of late because of poor coal supplies. Some 35 of India's 86 thermal stations have a coal stock position that will barely last seven days.

Stocks at 26 of these plants are just enough to generate for the next four days, according to the Central Electricity Authoirty. The installed capacity of these 86 thermal power stations is 85,477 MW.

(Sourced from ET)

South Africa coal price fall draws out Indian buying

Thu Feb 10, 2011 2:41pm GMT
LONDON (Reuters) - A fall in South African thermal coal prices to $113 a tonne this week has started to draw out Indian buyers who have been sidelined since November, Indian traders said on Thursday.
Spot coal prices topped $120 a tonne in December from $90 in October on strong Chinese spot imports and spiked again in January after disastrous Australian floods.
During this period, Indian end-users stayed firmly out of the market and relied on stockpiles, deliveries of term contract coal and cheaper coal from Indonesia instead.
India's share of South Africa's coal exports has risen from almost nothing five years ago to an average of 30 percent a month.

The participation of these buyers and the Indian traders who supply them is also a crucial element of the global spot market - their withdrawal usually triggers a fall in prices but panic-buying and bullish sentiment was overwhelming last month.
"At these prices of around $113, $114 a tonne FOB Richards Bay some more people are looking to buy South African coal now, it's not a bad price," one of India's biggest trader importers said.
"Between December and February there were no physical demand reasons for prices to up $24 and then down $20, it was all artificial," he said.
India's Binani Cement Ltd this week bought a March loading South African cargo at $114 a tonne FOB, traders said.
A few of the smaller to medium-sized cement makers are likely to issue tenders now to take advantage of falling coal prices and extremely weak freight, traders said.
Indian end-users tend to focus on the delivered cost of coal and their trader suppliers are constantly comparing the cost plus freight of South African versus Indonesian coal.
There had been some fairly active re-selling of South African cargoes back to the original suppliers in January by Indian traders who replaced these cargoes with Indonesian material but this has dried up now, Indian traders said.

"We did see some of that last month but nothing much now," one South African producer said.
"It did make sense to take cheaper Indonesian. The freight was also more stable but current South African prices are not bad and the market looks like it's going to fall further anyway," another Indian trader said.

South African coal is preferred by many Indian end-users in the sponge iron and cement sectors for its consistent quality but because the market is so price-driven, consumers will switch quickly if delivered costs rise to unacceptable levels.
Prices are expected to come under further downward pressure as Indonesian exports start to flow again following confusion over export licences.
Around 3.5 million tonnes of mostly low-grade coal was held up but this is starting to move again.(sourced:Thomson Reuters)