Indian cement makers and sponge iron plants are buying high quality thermal coal to bridge domestic shortfalls. Coal is being bought at a $12 to $15 a tonne discount to fresh shipments from Australia. Currently, the price is among the cheapest thermal coal of its quality available in the market.
The discord between China, the world’s largest consumer and importer of coal, and Australia had stranded as many as 70 ships and 1,400 seafarers waiting to discharge their cargoes outside Chinese ports in January. Most vessels subsequently discharged their cargoes or diverted to other destinations.
The development reflects the extent to which China-Australia relations have soured: China is battling a crippling energy crunch that’s set to get worse as winter sets in, and yet it won’t touch coal from Australia due to a geopolitical squabble. Indian firms have bought nearly 2 million tonnes of Australian thermal coal that has been sitting in warehouses at the Chinese ports, Bloomberg reports
Stockpiles of the fuel at Indian coal-fired power plants, which produce nearly 70 per cent of the country’s electricity, are near the lowest levels in four years and have prompted the state-owned miner Coal India Ltd. to direct more supplies to domestic utilities. That’s reduced shipments to other consumers, including aluminum makers, cement companies and steel mills. Prices for Australia’s Newcastle coal, considered an Asian benchmark, have surged close to a record.