Coal consumption growth in India may remain tepid

17 July 2017

The credit rating agency said it expects the PLF to remain at sub-65 per cent in the medium term. “Ind-Ra expects domestic coal consumption growth in India to remain tepid on account of an expectation of a two per cent fall in the FY18 plant load factor of coal-based plants,” it said in a report.

Given domestic coal availability is likely to increase, thermal coal imports may decline by 15-20 million tonnes annually over the next two-three years, it said, adding that this would affect global seaborne trade.

Ind-Ra’s price assumption for the benchmark thermal coal (Newcastle 5,500 calories) for FY’18-FY’20 is a band of USD 50-60 per tonne.

Government policies in large seaborne trade participants are likely to have a significant influence on coal prices.

Persistent substitution to renewable energy from fossil fuels will continue to moderate global consumption growth.

However, supply response to the bleak price outlook is likely to remain strong, as investment plans for large mining capacity have been limited and returns have been unattractive in the past few years.

Source-business-standard