India's coal demand is expected to stay high with electricity generationcapacity forecast to grow, speakers at the Coaltrans India Conference in Goasaid Tuesday.
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The power electricity demand and generation is expected to grow bybetween 5% and 10% from current levels over the next few years, said VipulTuli, chief executive and country head of Sembcorp India.
"The country is electrifying at a good rate with a lot of focus now onhousehold electrification," Tuli said, adding that power generation couldincrease at the rate of 10 GW to 25 GW in the medium term above the currentcapacity of 200 GW.
"Coal will remain very important to meet the base load needs asrenewables, despite dropping prices, have not reached grid parity as yet,"he said.
The volume of coal imports into India depends on the landed price,according to end-user sources.
The market consensus was that demand drops drastically when the CFRprice of 4200 kcal/kg GAR coal grade crosses $55/mt.
India's thermal coal imports in 2016 and 2017 showed diminished appetitefor seaborne cargoes as prices have gone up.
Imports fell to a low of 9 million mt in November 2016 when the price wasclose to $50/mt FOB for 4,200 kcal/kg GAR due to China's 276 mining days rulethat limited domestic supply leading it to import more cargoes of seabornecoal, according to S&P Global Platts data.
India's imports continued to decrease towards the fourth quarter of 2016as buyers waited for a price correction. But fast depleting stocks forced themto return to the market.
In early 2017, there was a spike in Indian buying when prices started toedge down after China returned to 330 mining days, easing the supplytightness. Indian imports remained erratic in 2017. They rose in Q2 to over 13million mt, plunged in August to below 9 million mt. In September, Coal IndiaLimited's production was affected by the monsoons and imports rose again.
Meanwhile, on the domestic front, the idea of coal miners turning intoelectricity producers could gain some traction soon, according to a speaker atthe conference on Tuesday.
"Indian coal miners will gradually transform into power producers like inthe case of Neyveli Lignite Corporation," said V.K. Arora, chief mentor atKaram Chand Thapar & Bros, a major coal trader in India.
"Coal miners becoming power producers allow coal to be used at cost pricefor power generation," he added.
--Edited by E Shailaja Nair, firstname.lastname@example.org