NEW DELHI: India’s coal imports fell 15 per cent to 132.3 million tonnes during the first nine months of the current fiscal year, according to local media reports, dealing a further blow to any hopes of a recovery in the global coal market.
The Institute for Energy Economics and Financial Analysis (IEEFA) think tank said a closer look at the figures revealed Indian imports fell 34 per cent year-on-year in December, following a record 49 per cent year-on-year decline in November. It added that the performance was contrary to both International Energy Agency (IEA) forecasts and global market sentiment that the Indian economy would drive demand for seaborne thermal coal for the foreseeable future.
“India was essentially the last flame of hope for the beleaguered seaborne thermal coal industry. December’s import data confirms the last flicker has been snuffed out, not least for Australia’s Galilee Basin,” said Tim Buckley, director of energy finance studies at the IEEFA, in a statement. “Indian thermal coal imports look to have peaked in mid-2015, and are now set to permanently and rapidly decline. The IEA’s forecast of sustained thermal coal import growth into India looks outdated even as the latest 2015 report was printed.”
The data follows similar indications from China that coal demand may have peaked as a consequence of the government’s ambitious clean energy programmes and moves to shut the dirtiest coal plants. Only this week, local media reports said the Chinese government was now planning to close around 1,000 coal mines across the country and ban any new mines until at least 2019.
The decline in India’s coal imports is being countered by an increase in domestic coal production, with Coal India reporting a 9.1 per cent increase in production over the first nine months of the year.
However, IEEFA argued there was evidence India’s still expanding fleet of coal power plants was already “overbuilt”. “Coal-plant utilisation rates continue to fall,” it said in a statement. “Having peaked in 2011/12 at 74 per cent, average coal-plant utilisation rates across India fell to 66 per cent in 2012/13, 61.9 per cent in 2013/14, 61.1 per cent in 2014/15 and IEEFA forecasts only 58.1 per cent in 2015/16. This trend parallels the five-year decline evident in China, which hit a record low in CY2015 estimated at 49.7 per cent.
Buckley said there were signs the Indian coal market was being impacted by the government’s ambitious renewable energy plans, with tender tariffs for new solar projects falling by a fifth in the past year.
