India’s thermal coal imports rose in April from a year earlier, led by utility restocking demand to meet summer electricity needs.

India imported 16.99mn t of thermal coal in April, up by 3.2pc from 16.46mn t a year earlier, according to shipbroker Interocean data. The imports were also up from 14.27mn t in March. Last month’s imports were at 16.1mn t and receipts for May are estimated at 16.24mn t, according to data from global trade analytics firm Kpler.

The increase in imports underscores strong demand from Indian generators for imported cargoes and the trend may continue in May-June with severe heatwaves in several parts of the country supporting coal burn. India took 9.93mn t of thermal coal from Indonesia last month, up by 4pc on the year, as strong power sector demand and competitive prices supported imports. The Indian power industry typically takes most of its coal from Indonesia.

The power sector imports were in line with an uptick in coal-fired generation and an inventory drawdown last month. India’s overall coal-fired generation — which meets most of the country’s power requirement — rose to 116.5TWh in April, up from 106TWh a year earlier, according to data from the Central Electricity Authority (CEA). April’s coal-fired generation was also higher from March’s 112.5TWh because heatwaves led to increased air-conditioning use.

Combined coal inventories at Indian power plants stood at 47.9mn t as of 30 April, down from 50.5mn t on 1 April, CEA data show. Stocks by the end of April were sufficient for about 16 days of consumption. Domestic coal supplies to utilities continued to increase last month, partly supporting the restocking activities. Inventories at Indian coal-fired power plants fell by over 9pc to 43.16mn t from 30 April to 29 May, according to latest CEA data.

The increase in Indian imports comes as authorities have implemented measures to ensure steady power supply to meet an increase in peak summer electricity demand during the summer. The measures include directives from the federal power ministry to utilities that run on domestic coal to use 6pc imported coal in their fuel mix. The ministry has also asked power plants that run on imported coal to keep power generation levels high until 15 October, supporting the prospect of higher imports from these utilities. These coal-fired plants have a combined capacity of 17.5GW.

India is forecast to have above-average rainfall during the monsoon season, which could support hydropower generation and pressure coal-fired generation. But imports for restocking purposes may continue.

Import mix

Imports from South Africa, the second-biggest supplier to India after Indonesia, slipped by around 11pc to 2.64mn t in April from 2.98mn t a year earlier, Interocean data show.

But South African coal imports more than doubled from 1.27mn t in March, underscoring steady consumption in the Indian steel industry, especially in the sponge iron or direct-reduced iron space.

Indian sponge iron output rose by 17pc on the year to 13.3mn t in January-March, with output averaging 4.43mn t/month during the quarter, rising from an average of 3.78mn t/month in the first quarter of 2023, according to Argus‘ analysis of data from the World Steel Association. The sponge iron production growth likely continued in April, supporting consumption of South African coal — a preferred origin as this coal meets some technical specifications of the industry. Sponge iron output was likely at 4.41mn t last month, up from 4.06mn t a year earlier, a market participant said.

Imports from the US — the third biggest supplier to India — held nearly flat from a year earlier at 1.28mn t, while shipments from Russia fell by 26pc to 829,394t from 1.12mn t a year earlier. But imports from Australia edged up by 12pc to 498,529t from 443,900t a year earlier.

View article here.