NEW DELHI: The growing demand of coal in the domestic market is likely to push up its international prices. Coal industry experts feel that the prices may go up significantly in near future, driven mainly by the demand in China and India.
Coal prices in the international market have gone up from over $80 per tonne in 2009 to over $110 per tonne at present. This, the experts, feel may cross $150 per tonne.
“China, which was earlier exporting coal, became net importer in 2008, while India’s coal import is continuously rising. The two countries together will play an important role in international coal pricing, which is expected to grow further,” Dipesh Dipu, director (energy & resources consulting) at Deloitte Touche Tohmatsu India, said.
India is one of the top ten coal producers as well as consumer in the world and contributes over 8% of the total international coal trading. It produced 538 million tonne in 2010-11, of which CIL alone produced around 431 mt. It imported 70 mt coal during 2010-11. While this was earlier expected to cross 100 mt in 2011-12, as per the latest estimate, the coal import for 2011-12 is likely to be 76-78 mt.
The estimates were revised after the new taxes were imposed by Australia and Indonesia on coal exports – the two major coal exporting countries for Indian steel, power and cement companies.
The new taxes will further jack up the coal prices which have been on a rise since 2009. The domestic demand for coal is going to go up to meet the higher energy requirement. The government-owned CIL has already indicated that it will have to look at importing to meet its commitments under the new fuel supply agreements (FSAs). Planning commission estimates that by 2016-12, India would need to import about 200 mt of coal to meet the energy requirement.
“The soaring demand and new taxes in Australia and Indonesia will send the prices up. Though, it is difficult to estimate the quantum of immediate increase in prices, the companies will have to buy it from abroad as there is no other option. May be, the imports would come down post 2017,” Dilip Kumar Jena, coal analyst at PwC, said.