BHUBANESHWAR: Domestic coal supply appears to be headed for a strong growth in the next five years, resulting in a decline in non-coking coal imports within this time period, said a CRISIL report.
The supply of coal would increase to 931 million tonnes (MT) from 664 MT between FY19 and FY23. “The growth will ride on increased production from Coal India Ltd (CIL) and commissioning of large captive coal blocks such as Pakri Barwadih, Parsa East and Kente Basan (15 MTPA each), primarily allotted to PSUs,” the report said.
Consequently, imports of non-coking coal are estimated to decline to 145 MT in FY23 from 162 MT in FY18. This is largely because the non-power sector would cut imports on improvement in domestic supply post linkage auctions and development of key captive blocks allocated to the non-regulated sector. Power sector imports, however, are projected to cross 75 MT by FY23.
The report said that non-coking coal consumption is projected to grow at a compound annual growth rate (CAGR) of 5.4 per cent to 1,076 MT in FY23, from 826 MT in FY18, driven by a 6.5 per cent growth in coal-based power generation.
On coking coal, the report said that imports will remain high at 85-87 per cent over the next five years. “Growth in steel production is expected to push up demand for metallurgical coking coal to 65 MT in FY23, while supply is projected to remain low at 19 MT.”
CRISIL also said that domestic non-coking coal prices would increase 10-12 per cent between this year and next. The prices would be governed by linkage prices, auction of linkages and spot auctions, it added.
Globally, non-coking coal prices increased 35 per cent on average in 2017 due to a rise in demand from China, India and other coal importing countries such as South Korea. However, supply remained subdued due to mining disruptions in Australia and mine closures due to safety concerns in China. The prices are expected to ease through 2018 and decline further to around $175-$185 per tonne next year, as supply returns to normal and demand moderates, it added.