India coal short-term outlook December 2018: safe haven for seaborne coal? Report

Commodity Market Report 07 January 2019

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Report summary

Growth in domestic coal production slowed down in Q4 2018 resulting in an increased reliance on imports. With several tenders already floated out, some power plants will continue to receive imported coal for blend during Q1 2019, sustaining coal imports even during the peak production period for Coal India. Lack of domestic supply continues to drive imports from the non-power sector, but with lowering petroleum coke prices and expected improvement in domestic production, some of the thermal coal imports may see substitution. Sustained growth in industrial production has improved domestic steel demand as tariffs make imported steel costlier. We discuss how does all this impact the coal imports in Q1 2019 and over the next two years in our report.

Executive summary
Prices
- Spot market remains tight as demand grows rapidly
Demand
- Alternative fuels complementing each other to meet strong demand growth
- Steel and hot metal output still on upward trend, but trade wars starting to sting
Supply
- Reliance on imports persist