India’s 2018 thermal coal imports rose at the fastest pace in four years, despite moves by Prime Minister Narendra Modi’s government to cut imports in a bid to reduce its trade deficit.
Coal is among the top five commodities imported by India, one of the world’s largest consumers of coal, and the rise in imports of the fuel after two consecutive years of decline adds to its trade deficit. That trade gap has been hurting the valuation of the rupee, the worst performing major Asian currency in 2018
Thermal coal imports jumped 19 per cent to 171.85 million tonnes in 2018, marking the fastest pace of growth since 2014, according to data from American Fuels & Natural Resources, a Dubai-based trader of U.S.-origin coal.
India imported 52.26 million tonnes of coking coal in 2018, up 14 per cent from 45.93 million tonnes in 2017, American Fuels’ data showed. Coking coal imports in the same period were 34.36 million tonnes, according to government data for April-November.
The value of all coal imports for the year ended December 31, 2018 was 28.7 percent higher at 1.72 trillion Indian rupees ($24.25 billion) than it was a year earlier, according to government data from the coal and trade ministries.
Traders say coal imports grew largely due to restrictions on consumption of petroleum coke, a dirtier alternative to coal, in some parts of the country.
While higher coal imports may be bad news for India’s trade deficit, they are a boon for international miners. Indonesia provided more than 61 per cent of India’s thermal coal imports, while South Africa accounted for 22 per cent and the United States more than 7 per cent.
Cheaper coal from countries such as Indonesia are likely to be preferred by buyers in India in 2019, over better burning coal from the United States, due to lower freight costs.
The ports of Mundra, Krishnapatnam and Kandla handled about 37.5 per cent of all of the thermal coal imports, according to American Fuels. Analysts say they expect India to be a key market for global miners in 2019 as China’s “war on pollution” will lead to lower demand from that country.