India’s state power plants resume coal imports amid domestic shortages

21 May 2018

Analysis: China scrap usage to displace 50 million mt ore/year

China’s new era of environmental regulation could see its annual crude steel production fall to around 800 million mt by 2020, a 5.5% decrease from 2017, according to S&P Global Platts analysis.

At the same time, higher ferrous scrap generation and usage could displace some 50 million mt/year of iron ore, or 5% of import volume, as the move toward a greener steel sector brings a structural shift, with some blast furnace and oxygen route steelmaking capacity replaced by scrap-using electric-arc furnaces.

This could mean China’s annual iron ore imports fall below 1 billion mt, the analysis showed. Given China’s journey up the quality curve, the pressure is likely to be felt more by lower-grade iron ore producers.

According to the China Association of Metalscrap Utilization (CAMU), total domestic production of scrap is forecast to reach 200 million mt by 2020. Subtracting CAMU’s target of 200 million mt of scrap availability from estimated crude steel production of 800 million mt, the analysis foresees 620 million mt of pig iron output for 2020. This would be a reduction of 95 million mt from 2017 and some 87 million mt lower than in 2016, when China produced 707 million mt of pig iron. The outlook implies some 95 million mt of hot metal could potentially be produced using scrap.

China’s steel sector supply-side reforms have been quicker and more successful than many imagined when the program to slash 150 million mt of steel capacity over a five-year period was launched in early 2016. The reforms, designed both to cut pollution and trim overcapacity, are ahead of schedule, with just 30 million mt of capacity still to be cut by 2020, and are en route to producing leaner and more competitive steel and coal industries. Over and above the official target, some 140 million mt of illegal and polluting induction furnace capacity was closed last year.

China’s 2017 surge in steel scrap exports, which reached 508,120 mt in September, is therefore thought unlikely to be repeated. These had fallen to 34,530 mt in March, according to customs data, as stocks held at IFs are eaten through.

China, the world’s largest importer of recyclable materials, is now setting the pace for scrap-related environmental considerations with its April announcement of new import restrictions on 32 types of scrap, including stainless steel scrap, vessels, slag and auto bales by end-2019. This, “together with the very high quality thresholds in the Chinese scrap standards, will put great pressure on the scrap processing capacity of the global recycling industry outside China,” said international recycling association, BIR.

Source: PLATTS

COAL

After two years of fall, India’s coal imports grow 8.1% in FY18

After two years of falling, the country’s coal import grew 8.1 per cent in 2017-18. There was sustained demand for coking coal from the steel sector and for steam or thermal grade coal from the power and cement sectors.

Data from the Centre for Monitoring Indian Economy (CMIE) shows the import at 213 million tonnes in FY18, up from 195 mt in FY17. After a peak of 215 mt in 2014-15, these had slid to 207 mt in FY16 and to 195 mt in FY17. And, although the central government wanted more use of domestically extracted coal, supplies were let down by transportation bottlenecks, especially shortages of railway rakes.

“The import trend will continue its uptrend, with the steel, power and cement industries expected to operate at higher capacities, aided by favourable demand. Also, domestic production is likely to stagnate, as there is no visible improvement in availability of railway rakes or infrastructure to evacuate coal,” said an analyst.

More, the talk of a ban on petcoke (petroleum coke) will tilt the market in favour of import. “Total import could be 235-245 mt if the government approves an order to ban use of petcoke, feedstock in the cement industry. An additional 35-40 mt of imported steam coal will be required to compensate for a petcoke ban,” goes a report from CARE Ratings.

Their report has forecast only 3.5-3.5 per cent growth in domestic coal output this financial year, to 705-712 mt. It has suggested swift auctioning of blocks with coking and steam coal reserves of 50 mt per annum to cut dependence on imported supplies.

In 2017-18, the two state run producers, Coal India (CIL) and Singareni Collieries Company together had an output of 629.4 mt, only 2.3 per cent over a year before. The official target was 662 mt.

The power sector reported shortfall in coal supplies by CIL. Coastal power plants opted for more of import due to this, even though domestic coal was cheaper. The country imported 46.5 mt of coking coal and 166 mt of thermal and other coal in FY18. Australia, Indonesia and South Africa are the biggest coal exporters to India, together 75-80 per cent in volume.

Total import was valued at $22 billion in 2017-18, around 4.9 per cent of all import in value terms. Coal is the fourth highest imported commodity, behind petroleum, precious stones and gold.

According to a report by FocusEconomics, demand from Asian markets for thermal coal resisted the usual seasonal slowdown in the early part of the April-June quarter and continues to defy the use of alternative energy sources. Demand for thermal coal is expected to stay solid this calendar year.

Source: BUSINESS STANDARD

India’s state power plants resume coal imports amid domestic shortages

State-run thermal power plants in India’s coastal states have again begun buying overseas coal due to domestic coal shortages, government and utility officials said, in a setback for the country’s long-term plans to eliminate imports.

After no significant imports in 2017, government utilities in Tamil Nadu and Andhra Pradesh have ordered several cargoes of coal since the beginning of this year, two officials said.

Andhra Pradesh, a state on India’s east coast, has imported 200,000 tonnes of coal so far this year and could import as much as 1 million tonnes in 2018, said Ajay Jain, a senior official in the state energy department.

“Coal has been a real problem. If we had depended only on coal, it would have been a disaster,” Jain said.

Tamil Nadu Generation and Distribution Corp, a government utility in the southwestern India state, has imported about 1.4 million tonnes of coal this year, after going a year without imports starting at the end of 2016, according to Vikram Kapoor, the chairman of the utility.

An increase in coal imports by state-owned power utilities undermines a pledge by Indian Prime Minister Narendra Modi’s government to cut thermal coal imports to zero by March 2018.

But state-owned Coal India Ltd, the world’s second-biggest coal miner by production, is grappling with a shortage of trains to carry the fuel from its mines to the country’s power plants.

Both Andhra Pradesh and Tamil Nadu are waiting for the wind energy season to start in June, when they expect dependence on coal to ease, Jain and Kapoor both said.

Domestic logistic bottlenecks, regulatory changes and surging power demand will likely increase 2018 thermal coal imports after two years of declines, Reuters reported in February.

Imports rose over 15 percent in the first quarter of 2018.

State-run utilities could add up to 5 million tonnes to India’s coal imports in 2018 because of the Coal India shortages, a senior executive from Adani Enterprises, India’s biggest coal trader told Reuters in February.

India imported 144.5 million tonnes of coal in 2017, according to data provided by American Fuels & Natural Resources, a Dubai-based coal trader.

Imports would be a boost for international miners such as Indonesia’s Adaro Energy, Australia’s Whitehaven Coal or global commodity merchant Glencore.

Maharashtra, a western coastal state, has floated a tender for procuring 1 million tonnes of coal to augment its existing stock and meet growing power demand, a senior official at Maharashtra State Power Generation Co, the state utility, said on Tuesday.

Gujarat, Maharashtra’s northwestern neighbour, plans to ramp up imports by 400,000 tonnes this year, according to a senior state government official.

Karnataka, another southern state, has resisted imports so far. But that might change, according to Kumar Naik, the managing director of state utility Karnataka Power Corp.

Two of Karnataka’s three major thermal power plants had almost run out of coal stockpiles, according to government data on May 14.

Source: REUTERS