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'India is becoming influential in world coal trade'

Q&A: James O'Connell, Managing Editor, Coal, Platts
Rajesh Bhayani / Mumbai April 2, 2010, 0:03 IST

India is changing the equations in the world coal market, says James O’Connell, managing editor, international coal, Platts, the leading global source for information on energy and metals. He spoke to Rajesh Bhayani on the trend and why coal prices would remain tight this year. Edited excerpts:

What is your assessment of India’s coal demand?
Coal India only recently reduced this current year’s (2010-11) coal production target from 520 million tonnes (mt) to 486 mt. India’s demand is estimated at 720 mt and considering captive production by some user companies, India is expected, according to the forecasts we have seen, to import 80 mt in 2010-11.

How will this impact the global coal trade?
India is now a buzzword in the international coal market, as its imports are rising at a faster pace. The world is being forced to acknowledge India’s demand and it is fast becoming a very influential player in the market. In fact, for exports out of Richards Bay in South Africa (SA), India’s demand almost tripled in 2009, year-on-year, and is threatening to become their biggest customer, with Europe falling behind. SA supplied 6.9 mt in 2008 and 17.9 mt in 2009, which is 29 per cent of its total exports. European companies are shifting to gas, which is cheaper, and they have to buy carbon emission reduction certificates when they burn coal. European imports have been forecast to fall by as much as five mt this year. India’s rising demand is changing the equation in world coal trade flows.

Coal India’s production plans hinge on environmental permissions and once that is in place, imports may come down.
Looking at power production targets and mega power projects coming up, India’s demand and imports of coal are only expected to increase. In fact, considering this, Platts is increasing its India coverage and will be providing more information required by Indian and international companies in the short term. International brokers are being attracted and will, no doubt, establish offices in India to facilitate imports. India has certainly dominated the news in recent weeks. This is evidence that consumers are seen in the international spot market more frequently. Liquidity in the spot coal market is also increasing.

How are coal prices expected to move?
Japanese coking coal consumers entered into quarterly contracts with Australian coking coal suppliers recently at $200 per tonne as against an offer, sources told Platts, for an annual coal supply contract at $250 per tonne. Experts are forecasting prices and availability to remain tight. Thermal coal contracts are currently being negotiated and our market sources tell us these could be signed around $85-90 per tonne or higher,


http://www.business-standard.com/india/news/%5Cindia-is-becoming-influential-in-world-coal-trade%5C/390464/