India steam coal imports to double, boost SAfrica

India’s steam coal imports are expected to double to 100 million tonnes in three to four years on the back of growing power demand, boosting South Africa’s exports, industry players said recently.

McCloskey, mjunction Services, CBB Energy and Emirates Trading Agency estimate the Asian country imported between 43 million and 55 million tonnes of steam coal last year. South Africa shipped 17.7 million tonnes of its coal to India, the world’s third largest consumer of the commodity, with Asia in total taking 25.1 million tonnes.

This year the Asian continent is expected to become South Africa’s primary coal export destination, with some analysts estimating up to 75 percent of the country’s product will go east.

“People are saying that 75 percent will be going east rather than west this year and that sounds very feasible,” David Price, a coal forecaster at McCloskey consultancy, said on the sidelines of a coal exports conference.

There are already enquiries from India and China for far more coal than is available for the first quarter, making a scramble among buyers and a hike in prices inevitable, producers said. Buyers at the conference declined to comment on price prospects.

Indian buyers have been waiting since October for South African prices to fall back to $50.00, but prices rose steadily in November and surged in December and early January to around $90.00 a tonne FOB Richards Bay.

Alexandre Levy, a Geneva-based trader at CBB Energy, said 32 percent of coal imports to India came from South Africa and 63 percent came from Indonesia. That is bound to change, he said.
“Indonesia dominates but South African coal has gained market share,” he said.

India is a price rather than quality-driven market. End-users have switched to South African from Indonesian coal to a large extent because the delivered cost of South African coal has offered a saving of several dollars per tonne.

Viresh Oberoi, a managing director at Tata Steel-linked mjunction, estimates South Africa will supply India with some 25 million tonnes of coal by 2012 to feed its power, steel and cement industries, a figure others called conservative.

China, the world’s largest producer which became a net importer this year after domestic coal became more expensive than imports, may also turn to the South African product. In 2009, the Asian giant imported 1.4 million tonnes of South Africa's coal and is seen hungry for much more.

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