Foreseeable strong Indian coal imports is
expected to lend continued support to rates in the panama bulk sector in the
coming quarters, following already climbing rates so far this year, according
to analyst Drewry.
Indian Government’s plan to invest heavily in infrastructure, domestic coal
demand will prompt firmness in coal imports, leading to increased rates in the
Panamax rates to rise further on coal
imports in India
rates have skyrocketed in 2019 and are likely to rise in the coming quarters
supported by strong demand for coal imports in India,” said Rahul Sharan, Dry
Bulk Lead Research Analyst at Drewry.
Panamax Index (BPI) started off at close to 1,500 points at the beginning of
2019 before dipping to just over 500 points in February. But ever since, the
BPI has gained strength and risen steadily until end-June before a surge in
July and closing at 1,753 points on 5 August.
Indian govt to invest massively in five
years on infrastructure says FM
Finance Minister had said in early-July that the Government plans to invest
$285bn annually over the next five years on infrastructure – a surge of more
than 150% compared with the past investment.
initiatives will result in a massive surge in demand for steel, cement and
power. The spurt in demand for cement has already generated huge requirements
for non-coking coal imports this year.
cement production has increased to more than 337 million tonnes in FY2018-19, a
rise of more than 13% from the previous financial year.
about 200 kilograms of coal to produce one tonne of cement. Therefore, to
produce 337 million tonnes, the Indian cement industry consumed 67 million
tonnes of coal in FY2018-19. With the new Government firmly in place with
emphasis on infrastructure, the demand for cement is expected to surge over the
next few years. Additionally, with increased industrial production, coal demand
for power generation will also expand,” Sharan explained.
domestic coal production has been increasing at a very slow pace, leaving power
companies to depend on coal imports. For instance, domestic coal production
increased 5% until May 2019, but imports surged 29%,” he added.
Domestic supply of coal not able to match
demand; hence high imports
inability of domestic coal producers to match domestic demand will keep Indian
imports high over the next few quarters.
Sharan pointed out that the Indian Government plans to commercialise coal
mining, which will boost domestic production and cut imports.
will take time and until then coal consumers will have to rely on imports for a
large part of their requirements”, according to Sharan.