Global coal prices at record high, to increase India’s import bill

The ongoing conflict between Ukraine and Russia is likely to have a bearing on the supply of thermal coal

Topics


Coal price | India imports | coal sector


IANS  | 
New Delhi 


The ongoing conflict between Ukraine and Russia is likely to have a bearing on the supply of thermal coal, while direct or indirect sanctions from the western countries are also expected to put an upward pressure on its prices.

Currently, international coal prices are at their lifetime high at above $400 per tonne.

“With Russia’s invasion of Ukraine, there is an anticipation of lower supply of coal in the global market, thereby driving up the prices in the international market. Also another factor could be the rise in the price of alternate fuels like crude and natural gas,” said Rajnath Yadav, Research Analyst at Choice Broking.

Russia accounts for around 20 per cent of the global thermal coal exports.

“Currently, the pan-India incremental coal productions are meeting the incremental coal demand, but sustaining a required level of inventory at the power plant and also to serve the non-power sector, a higher growth in production is required.”

Thus, for the power sector, there are no concerns from the higher international coal prices, but the non-power sector is expected to face the maximum impact.

Even though India doesn’t import coal from Russia, the surge in its prices globally will have a cascading effect on the price discovery front in those origins where it imports from. As per reports, India ships in high-grade coal from Indonesia, Australia, and South Africa.

According to Manoj Kumar Jain of Prithvi Finmart, rise in international coal prices would increase import bills, thereby widening the country’s trade deficit.

“Higher coal prices are having direct linkage to the inflation as rising energy prices impact industrial and processing costs,” he said.

Coal supply side shortages (mainly due to under-stocking in the pre monsoon months) and price increases are affecting power generation and growth.

Currently trading at $459 per tonne, with all the global economies opening up (sans geo-political worries), coal prices are seen shooting up towards $478-$505 per tonne in the near-term, said N.S. Ramaswamy, Head of Commodities at Ventura Securities.

“An ongoing energy crunch in Europe and Asia has been driving unprecedented demand for shipments of thermal coal from Australia, and (which) has boosted commodity prices to record levels.”

Of all the sectors, India’s MSME industries are facing the brunt due to coal shortage, Ramaswamy said.

–IANS

ad/vd

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.


We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor