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From the Editor’s Desk
Worldwide coal consumption for electricity generation is alm ost growing at the same rate as the electricity consumption. As a result, the share of coal in the power mix has almost remain ed steady for the past 20 years. Even if it has only decreased by two points since 2010, coal is stil l the most widely used energy source for electricity generation in the world. In India, power sector consum ers have received nearly 440 million tonnes of coal in FY 20 18-19, a growth of more tha n 7% compared to last year, augme nting coal stock at plant end s after a long spell of demand supply mismatch. CIL has also urged the Therm al Power Plants to enhance the ir inventory to meet the electric ity demand in summer. Inspite of best efforts made by CIL & Subsidiaries, privat e power generators are peeved over pre sent coal supply pattern alle ging that their FSA coal quantity is not being received in time. E-auction prices of CIL coal also rose more than 50% in the third quarter as the company offe red half the quantity it did a year ago. Consequently, Non-powe r companies including CPPs we re thus hard pressed for coal, res ulting in increase of demand and its soaring prices at auctions.
Coal India has decided to reo pen a number of mines which were closed earlier due to safety or viability issues. CIL Subsidiaries like CCL and BCCL are collatin g data and assessing feasibility . Presumably supply of higher quality coal will increase in cou rse of time. To increase competitiveness and make the future tranches of auction or allotment attractive and commercially viable, the Union Government has approv ed sale of 25% of coal produc tion from captive mines in open ma rket with payment of additio nal premium of 15% on such sale . This move may address the issue of lack of response from bidder s during earlier tranches of auc tion and allotments.
Coal rake loading at Coal Ind ia source upto January, 2019 recorded a growth of 6.9% fro m same period of last year. It is good to know that record gro wth in freight loading has bee n reported from Palakkad divisio n of Southern Railway due to the loading of coal at New Manga lore Por t.
Happy reading......
4 | CCAI Monthly Newsletter February 2019
Content Vol. XLVI No. 23 February 2019
06 Consumers’ Page
Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy. 4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in
08 Power
Editor : Subhasri Nandi
12 Domestic
Annual Subscription Rs. 400/(including postage) MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.
18 Global
21 |Energy Generation Report 22 |In Parliament 25 |Monthly Summary Of Domestic Coal 27 |Overall Domestic Coal Scenario 28 |Monthly Summary Of Imported Coal &
Petcoke
30 |Production And Offtake Performance Of Cil And Subsidiary Companies
CCAI Monthly Newsletter February 2019
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CONSUMERS’ PAGE Present Coal Scenario Coal India has produced 58.05 million tonnes of coal in February 2019 compared to 54.48 million tonnes in the same month of last year, a growth of 6.5%. Total production for the period of April 2018 - February 2019 is 527.70 million tonnes, a growth of 6.6% compared to the same period last year. Offtake stood at 51.45 million tonnes in February 2019 compared to 49.94 million tonnes in same month of 2018, a little growth of 3%. Thus, total offtake for the period of April 2018 - February 2019 is 548.49 million tonnes, a growth of 4.5% compared to the same period last year.
Consumers’ Concern 1. Coal Stock Position Coal India has supplied 440.80 million tonnes coal to the power sector from April 2018 to February 2019 in this financial year. This is an increase of more than 7% over the same period of last year. There is enough coal stock at power plants at present and the improved situation has helped to bring down the number of critically coal-starved power stations from 9 in December 2018 to 4 at the end of February this year.
2. Coal Quality issues Inspite of best effort and continuous monitoring done by CIL & Subsidiaries, coal consumers are still facing the issue of quality variance in the grades allocated to them from Subsidiary Coal Companies of CIL. Though the quality has improved compared to the previous condition, consumers have expressed
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discontent over the grade variance mainly from ECL and BCCL. This problem also causes financial losses due to receipt of lower grade coal in comparison to the billed grades. Therefore, coal consumers have requested the Coal Controller, CIL & its Subsidiaries to kindly intervene into the matter so that actual grade of coal may be received as per the contracts from a few sources where grade slippages are occurring regularly.
3. Dissatisfaction over coal sample collection procedure for 3rd Party Sampling & Analysis Present procedure of coal sample collection and preparation for Third Party Sampling & Analysis is inadequate to get an accurate representative sample for a particular consignment. Therefore, it should be as per IS: 436 (Part 1/Section 1), 1964. As per BIS norms, in case of sampling from loaded
wagons 25% of the total wagons are to be covered under sampling but as per FSA only 10% of total wagons are being considered for sampling for supply through rail mode. Third Party Agencies engaged for sampling are following the procedures as per FSA. Consumers opine that if BIS norms are adopted in case of 3rd Party Sampling, there will be less variation in the analysis results. In road mode also about 13% of the loaded trucks are covered under sampling as 3rd Party Agencies are taking samples from every 8th truck. Similarly consumers have requested that samples may be collected based on random table of BIS covering 25% of total trucks loaded under road mode for a day.
of contracted grade of coal from both the primary and secondary sources Industries under Non-Regulated Sector are adversely affected due to non-availability of contracted grade of coal from both the primary and secondary sources. Therefore, they have urged CIL for making necessary amendments in the existing and future Fuel Supply Agreements (FSAs) so that coal can be made available from other available sources based on mutual consent in case of non-availability of contracted grade of coal from both primary and secondary sources.
4. Short receipt of coal from Pan- 8. Highest premium charged by CIL Subsidiaries for conversion of Rail daveswar Area of ECL to Road/RCR mode Power Sector consumers have communicated their grievance regarding short receipt of coal from Pandaveswar Area of Eastern Coalfields Limited.
5. Request from consumers for dispensation of Compensation Cess on coal Imposition of Compensation Cess on supply of coal has lead to an increase in cost of coal to a great extent. Therefore, consumers in both Power and Non-power Sectors have requested Coal Secretary, Revenue Secretary and GST Council for removal of Compensation Cess levied on supply of coal or ad valorem in rate of tax or allowing credit of Cess against GST liabilities other than Cess also.
Though CIL has allowed the conversion of linked and auction quantity from Rail to Road/RCR mode on a monthly basis for better evacuation but Subsidiary Coal Companies are adding clause to CIL notice according to which they shall charge the highest premium of any sub-sector in the last 2 concluded tranches under NRS Linkage Auction, for allowing Change of Mode. Consumers have urged that for Change of Mode from Rail to Road/RCR due to huge backlog in loading of rakes, the premium fixed during initial agreement should only be charged instead of additional premium being levied on the auction consumers.
6. Request for extension of exemption in advance payment of coal value CIL has provided relief to its customers by extending the exemption in advance payment of coal value till March, 2019. Due to pendency of coal rakes industries have requested CIL for extension of exemption pertaining to advance payment from April, 2019 for survival of the industrial sectors.
7. Framing of policy for making coal available in case of non-availability CCAI Monthly Newsletter February 2019
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POWER Modi government makes it clear Inadequate tariff hikes weakento states: Expect 24×7 power ing discoms’ financial position, supply to all households by April says Power Minister The central government expects the states to make sure that all households get 24×7 power supply by April this year, barring those in the agricultural region, Power Minister RK Singh said. Since ‘metering is inadequate’ and there is ‘need to conserve ground water’, these states would be exempt from providing uninterrupted electricity to the agricultural segment of the population, he also said during a conference of power ministers of states and union territories on Tuesday. While the issues are being resolved, 8-10 hours of power supply would be ‘sufficient’ to agricultural consumers, he added. The discoms should look at reducing the losses so as to turn the sector sustainable, he said adding that the government’s plans to shift to a prepaid system for power may leave states unable to buy power if they didn’t have money readily available. ”The sector will not be sustainable until and unless we reduce the losses, until and unless we are able to collect money for every unit which we distribute,” he added.
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The Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh, told the States that rampant cross subsidisation of power cannot continue. Inadequate electricity tariff hikes by State distribution utilities (discoms) have weakened their financial position due to rise in the average cross subsidisation of power. This was despite the Centre’s push towards reducing the gap between cost of power procurement and supply. The muted tariff hikes were implemented despite an increase in establishment costs, coal price and higher demand, according to a presentation at the State Power Ministers’ conference in Gurugram. According to data shared by the Centre, total subsidy booked during financial year 2016-17 stood at 42 per cent of the total revenue, up from 20 per cent (during fiscal 2015-16). There is a need to reduce this gap, said Singh.
Private power producers sulk over priority to PSUs in coal allocation Private power generators are peeved over the skewed priorities in allocation of coal. They alleged that public
sector players are prioritized in coal supplies, leaving their private counterparts in a quandary. What’s more, private thermal power producers claim coal distress is growing as Coal India Ltd (CIL) and its flagship subsidiary South Eastern Coalfields (SECL) are violating the terms of the Fuel Supply Agreement (FSA) inked with them to favour thermal power plants (TPPs) in the public sector. CIL denied the allegations, ruling out any favour shown in distribution of coal to the public sector generating utilities. During April-February period of this fiscal, coal supplies to central sector power plants, state public utilities and Independent Power Producers (IPPs) was 90 per cent, 79 per cent and 72 per cent against the minimum assured supply level of 84 per cent, 86 per cent and 76 per cent respectively.
NTPC had given notices to Andhra Pradesh, Karantaka, Telangana and Jammu and Kashmir for curtaining power supply over pending dues. APP, in a memorandum to the government, sought Power Minister R K Singh’s intervention to resolve the issue. APP is an industry body of 27 leading independent power producers, including Adani Power, GMR, Jindal Power, JSW Energy and Sembcorp Energy India. “We would be grateful if these states can be asked to clear pending payables, as further piling up of dues may result in inability of generations to pay for coal, and in this in turn may adversely affect the power supply position,” APP Director General Ashok Khurana said in the letter to the power minister.
NTPC may cut power to 3 southDe-stress India’s thermal projects ern states over non-payment; UP would need supply of 125 million next in list tonne of coal, a challenge in toElectricity shortages loom over five states at a time day’s scenario when the respective governments would like to enAmidst moves to revive stressed thermal assets of 45,000-MW capacity, what has slipped under the radar is the need for coal linkages if the projects are to be made viable. For, it is estimated that, operating at 70% PLF, these plants would annually require in excess of 125 million tonne of coal, with a possible reliance on imports increasing costs and threatening project viability. The original plan mandated such producers developing captive greenfield mines to meet their coal needs. However, it would now be difficult for the stressed assets to mobilise capital to restart projects and develop coal mines at the same time. “If a resolution for the sector has to be achieved, then a collective solution for fuel supply is needed. This could entail tasking an independent coal company to finance, develop and supply coal at notified rates to all stressed thermal assets,” says Kameswara Rao, Partner, GRID.
sure a round-the-clock supply in the election season.
NTPC has issued notices to Telangana, Karnataka and Andhra Pradesh for “regulating power supply” from February 9 owing to non-payment of outstanding dues for more than two months. All these states are governed by non-BJP parties. NTPC has outstanding dues of Rs 7,859 crore, of which Jammu and Kashmir (J&K), Uttar Pradesh, Telangana, Karnataka, and Andhra Pradesh account for the most, said executives of the state-run power company. The three Southern states, which together owe Rs 5,837 crore to NTPC, have not made any payment for over two months now — the maximum period of default. UP is also delaying its payment, but has not defaulted yet.
Government eases green clearPower producers caution dis- ance norms for captive power coms on “adverse” supply due to plants rising dues Joining the chorus against power distribution utilities (discoms) delaying payment to electricity producers, the Association of Power Producers (APP) has said the burgeoning dues may adversely affect electricity supplies. Earlier this month, state-run power giant
The Centre has exempted industries like steel, cement and metal from mandatory prior environment clearance for setting up a new or expanding the existing captive power plant employing waste heat recovery boilers (WHRB) without using any auxiliary fuel.
CCAI Monthly Newsletter February 2019
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The exemption to industries having potential for heat recovery has been given to promote energy conservation and reduce green house gas emissions, according to an order.
Gw of solar power projects to be set up by Central government-owned companies and mandated them to source panels locally.
This exemption was so far given to thermal power plants using waste heat boilers without any auxiliary fuel.
The move is likely to give a boost to the domestic solar manufacturing industry. Indian panel makers have been facing stiff challenge from imported solar cells and modules, coming especially from China.
Prior environment clearance will not be required for setting up of new or expansion of captive power plants employing WHRB without using any auxiliary fuel, in the existing cement plants, integrated steel plants, metallurgical industries and other industries having potential for heat recovery, the order said.
“Solar accounted for over 50 per cent of new power capacity; rooftop solar grew by 66 per cent” The domestic solar market saw an addition of 8,263 MW during 2018 — down 15.5 per cent compared to 9,782 MW in 2017. This was mainly due to safeguard duty, GST issues, and land and transmission issues which took a toll on large-scale installations, according to Mercom India Research’s Q4 and Annual 2018 India Solar Market Update. Total power capacity additions were 16.3 GW in 2018 across all generation sources. Of this, renewable energy accounted for nearly 70 per cent, with solar representing 50.7 per cent of new capacity and wind 14 per cent. Coal accounted for 27.5 per cent of new capacity added. “For the first time, solar made up over 50 per cent of new power capacity in 2018. We will continue to see a steady shift toward solar as prices continue to drop. This is going to be the new normal as coal plants continue to shutter,” said Raj Prabhu, Chief Executive Officer (CEO) and co-founder of Mercom Capital Group.
Domestic solar panel manufacturing industry gets 12-Gw boost from Centre The domestic solar panel manufacturing industry, which is battling competition from its Chinese counterpart, has seen a ray of hope with the latest announcement by the government. The Cabinet Committee on Economic Affairs (CCEA) approved 12
10 | CCAI Monthly Newsletter February 2019
India set to benefit as wind power gains speed India’s economy is the world’s sixth-largest by nominal GDP and the third-largest by Purchasing Power Parity (PPP). It is the world’s fastest growing major economy, as well. India is the third largest energy consumer in the world and is the backbone of the economy. Access to cheap energy is essential to India’s sustained accelerated growth. As per International Energy Agency (IEA), India’s aggregate energy consumption will be more than double by 2040. This growing demand for energy has been traditionally dependent on imports of conventional energy like coal, oil and natural gas which poses a threat to India’s energy security. Strategically, it is important that a country is energy independent or it meets the requirements of energy security which means ‘the uninterrupted availability of energy sources at an affordable price’. India has a high potential for generation of renewable energy from various sources—wind, solar, biomass, small hydro and the cogeneration of bagasse. The total potential for renewable power generation in the country as on March 31, 2017, is estimated to be at 1001 GW which includes a solar potential of 650 GW, 302 GW of wind power potential at 100 m hub height, small hydro potential of 21 GW, biomass power of 18 GW, 7 GW from bagasse based cogeneration in sugar mills and 2.5 GW from waste to energy.
DOMESTIC Government allows sale of 25% coal from captive mines in open market Union cabinet approved sale of 25% of coal production from captive mines in open market with payment of additional premium on such sale. The cabinet committee on economic affairs has approved the methodology for allowing allocation of coal mines for specified end use or own consumption to sell 25% of actual production in open market with premium of 15% on such sale under the (Coal Mines Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act 1957, an official said. The decision is aimed at increasing competitiveness and to make the future tranches of auction/allotment attractive and commercially viable leading to higher revenues for the government, an official statement said. The move will address the issue of lack of response from bidders during earlier tranches of auction and allotments, it said
Coal India to reopen mines to increase output, generate local jobs Coal India (CIL) has decided to reopen a number of
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mines that were closed earlier due to safety or viability issues. It is an endeavour to generate local employment and increase production of higher grade of coal. Subsidiaries such as Central Coalfields — which had closed three mines — and Bharat Coking Coal — that has many such mines — are collating data and assessing feasibility. Central Coalfields reopened the Rajhara coal mine in Jharkhand, where operations had been suspended since 2010 due to safety concerns. A senior Coal India executive said the mine was opened after getting environmental clearance on February 14. Rajhara was initially an underground mine but after nationalisation it was converted into an opencast mine to recover good quality reserves of coal which otherwise would have been lost.
Prices soar 53% after CIL diverts coal to power companies Coal India’s e-auction prices rose about 53% in the December quarter, when the company offered half the quantity it did a year ago after diverting supplies to power plants. It offered 14.65 million tonnes of coal during the quarter against 30.8 million tonnes a year earlier. As a result, average prices rose to Rs 2,847 per tonne from Rs 1,859 per tonne. Coal India increased supplies to power, its priority sector, at the cost of other customers. “Non-power companies including captive power
plants were thus hard pressed for coal, raising demand and its prices at auctions,” a company executive said. The government had asked Coal India’s subsidiaries to increase supplies to the power sector. About 5,800 goods trains allotted to other customers were not loaded in November and December.
Coal Minister Piyush Goyal had earlier urged staterun Coal India to pledge self-sufficiency in production to eliminate import of the dry fuel.
Coal India says logistics, law and order issues affecting supply to Protests may derail MCL’s pro- Tamil Nadu duction target for FY19 Coal India Ltd subsidiary –Mahanadi Coalfields Ltd — is likely to miss its production target for the 2018-19 fiscal, as ongoing protests at some of its key mines continue to hamper output, company sources have said. Protests by villagers seeking employment, among other demands, have led to loss of production hours in the current fiscal, mainly impacting the Kaniha mine in Talcher coalfields and Hingula open cast mine, the sources said. MCL has already revised its aspirational targets to 162.50 million tonne of coal production and 169 million tonne of offtake for the fiscal ending March 31. “Till February 19 in the current fiscal, a total of 6,051 hours of production has been lost due to the protests. And with the elections nearing, such politically motivated disruptions are expected to rise,” an MCL source told. Even last fiscal’s production of 143 million tonne might not be equalled, the sources said. During the April-January period, production declined 2.8 per cent on-year to 111.61 million tonne, they said, adding, about 4.87 million tonne of output has so far been lost in 2018-19, due to disruptions in mining operations in the first three quarters.
Coal imports rise 5% to 190 mn tonnes in April-January: Report Coal imports increased by 5.1 per cent to 189.9 million tonnes (MT) in the April-January period of the ongoing fiscal, according to a report. Coal imports were at 180.61 (MT) in the April-January period of the previous fiscal, the report by mjunction services showed. But January month saw a decline in coal import to 17.25 MT from 19.59 MT in the same month of the previous fiscal. In non-coking coal, the coal stock scenario at thermal power plants showed a steady improvement and this helped to curb volumes, he added. Of the total imports during January 2019, non-coking coal shipments were 12.35 MT and coking coal at 3.53 MT.
State-owned miner Coal India Ltd (CIL) said power plants based in Tamil Nadu have received lower supply of the fuel against their respective contracted quantities mainly due to logistics problems in the rail-cum-sea route and mismatch between the requisition placed by its subsidiaries and wagon supplied by Indian Railways. CIL said 12.6 million tonne of coal had been supplied to the Tamil Nadu state power generation corporation till January, 2019, against the 16.6 MT it was supposed to receive. “Frequent law and order problems in Talcher fields of Mahanadi Coal Fields” also contributed to the supply gap, CIL said. Nevertheless, coal supplied to the state has increased 12% annually, the miner added. Coal-based power generation has grown 4.8% year-on-year (y-oy) in the first 10 months of FY19. In the same period, coal supply to power plants have increased by more than 7% to 401.2 MT. The number of railway rakes allotted to the power sector stands around 253 rakes/ day, 13% higher than the same period of last year.
CoalMin expresses concern over delay in commissioning of CIL washeries The coal ministry has expressed concern over delay in the commissioning of around 18 washeries by state-owned Coal India Ltd (CIL) and stressed upon the need for timely completion of the projects. In a review meeting on the upcoming washeries of CIL, Coal Secretary Sumanta Chaudhuri expressed “his concerns on the delay in commissioning of washeries”, according to the minutes of the meeting. The secretary also stressed the need for timely completion of projects. He also called for regular monitoring of washery projects at CIL through suitable software. The washeries which were reviewed by the secretary are Dahibari, Patherdih-I, Madhuband, Patherdih II, Bhojudih, Dugda and Moonidih washreies of BCCL (Coal India arm). Tapin, Kathara, Ashok, Karo and Konar washeries of CCL (CIL arm), Ib Valley, Basundhar, Hingula and Jagannath washeries of MCL (CIL arm) and Kusmunda and Baroud washeries of SECL CCAI Monthly Newsletter February 2019
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(CIL arm) were also reviewed, the minutes said. Currently, CIL operates 15 coal washeries with a total washing capacity of 36.8 million tonnes per annum (MTPA). CIL has planned to set up 18 new washeries with state-of-the-art technologies with an aggregate throughput capacity of 95.6 MTPA.
RAILWAYS
New Mangalore’s coal handling boosts Palakkad rail division’s freight loading The loading of coal at New Mangalore Port has helped the Palakkad division of Southern Railway to record growth in freight loading during the current financial year. The total freight loading in Palakkad division stood at 5.039 million tonnes during April-January of 2018-19 as against the target of 4.762 million tonnes, recording a growth of 5.8 per cent against the target. Freight earnings A statement by the Palakkad division of Southern Railway said the coal loading from New Mangalore Port had helped the division to register improvement in freight loading. The Palakkad division transported 3.645 million tonnes of coal during the period. The division’s freight earnings of Rs. 385 crore for AprilJanuary of 2018-19 was 37 per cent more than that of corresponding period of the previous fiscal. It said that the earnings from the commercial sundry such as parking and catering, commercial publicity, etc also increased by 30 per cent in the first 10 months of 2018-19. The division earned Rs. 16.23 crore during the period.
Indian ports to log 6-8% cargo growth on crude, coal volumes in FY19: Study Indian ports are expected to record six to eight per cent growth in cargo volumes in FY19, backed by drivers like coal, crude oil and containers. Ports across the country handled 1209 million tonnes of cargo in 2017-18, achieving seven per cent over the previous year. The sagging coal imports which had raised concerns for ports dependent on the dry fuel, have staged a rebound. The momentum in coal imports seen in the first half (April-September) of this fiscal is set to continue through the year, auguring well for
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the port operations. In its outlook for the ports sector, ratings agency Icra said, “Demand revival from the power sector and key consumer industries would be critical for sustained pick-up in coal imports. Icra expects that the revival in coal volume import growth would support the revenue growth for port players operating in the bulk segment in FY 2019 and healthy growth should continue in FY 2020 as well.” In addition to coal, Icra believes overall cargo growth will gain traction over the medium to long-term, driven by domestic demand for crude oil to meet petroleum requirement. Containers, too, will lead cargo shipments given the costs and logistics advantages associated with containerization.
STEEL
Steel ministry creates level playing field for steel manufacturers Union steel ministry has decided to stop classifying steel producers as integrated steel producers, primary steel producers and secondary steel producers. The move is aimed at providing a level playing field to steel manufacturers, both in the small and medium sector and large players, with different capacities who follow different routes for steel production, an official statement issued said. Instead of the earlier classification, once the steel product is certified by the Bureau of Indian Standard and meets the desired specifications, “no distinction shall be made on account of the basic input material and the process followed,” the statement said. Incidentally, some 53 quality control orders have been issued in this regard laying down the quality standards for several steel products. Government engineering departments especially in the C.P.W.D., Military Engineering Service and N.B.C.C. have been asked to ensure adherence to the above clarification and avoid any restrictive practices in their tenders, the statement added.
Domestic steel firms set to hike prices by Rs 1,000 a tonne from March 1 Prompted by strong demand growth in the domestic market, steel producers are set to hike product prices by Rs 1,000 a tonne from March 1. This will be the third rise in prices since February 1.
“There is a growing demand for steel across sectors, and so all large producers are going ahead with a yet another price hike,” said an industry source in the knowledge of the development. Tata Steel, Sajjan Jindal-led JSW Steel, state-owned Steel Authority of India (SAIL), Naveen Jindal-led Jindal Steel & Power, and Rashtriya Ispat Nigam Limited are among top steel producers in the country. They had earlier raised product prices by Rs 750 a tonne on February 1 after a gap of four months, and followed it up with another Rs 1,000 hike in the third week of February. Besides a spurt in demand, industry players attribute the increase in steel prices to a 17 per cent increase in iron ore prices by NMDC.
India could extend deadline on steel import rules for automakers: Sources India is considering extending by four months a compliance deadline on tougher import rules for steel that are aimed at forcing automakers to use locally made alloy, said two sources familiar with the matter. Compliance to the new rules had been set for Feb. 17, which was an extension of two months, but strict adherence to the regulations would have stalled production for India’s auto industry, a federal minister has warned. India’s auto manufacturing sector is dominated by Maruti Suzuki Hyundai Motor Co, Honda Motor Co and Ford Motor Co. Carmakers continue to rely on imports because they say local steel companies do not manufacture the grades they need, said Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers (SIAM). SIAM counts Maruti Suzuki, Toyota Motor Corp, Volkswagen, BMW and others as members.
CEMENT
Cement firms’ margins to improve on tapering costs, rising demand: Ind-Ra Indian cement manufacturers are poised to benefit from the continuing demand push, led by the healthy growth expected across end-markets such as individual home building, affordable housing, roads and irrigation sectors, according to a study by India Ratings and Research (Ind-Ra). This momentum is expected to continue in FY20, propelled by government-led spends on roads and affordable housing schemes,
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the study adds. The agency added that it is maintaining a stable outlook on the cement sector for FY20. Utilisations are likely to rise but not to the extent that producers would see any increase in pricing power. However, cost pressures will reduce because of stabilisations in input costs and currency movements. This, coupled with cost-saving measures, could lead to a modest improvement in margins in FY20, Ind-Ra added.
Southern cement players in a sweet spot on higher prices across regions Recent channel checks by brokerages showed an improvement in cement prices across India, for February. The same was being led by South India, where a 16.9 per cent month-on-month (MoM) rise in the price of a 50 kg bag has resulted in a 5.8 per cent improvement in the average all-India cement price MoM, indicates JM Financial’s data. This is good news for South Indian cement firms, which have seen a spell of weak prices and rising expenses impact their earnings growth.
Cement workers’ pay to rise by Rs 5,000 as CMA, unions sign wage pact The Cement Manufacturers’ Association (CMA) has signed with major trade unions a new wage settlement pact, which would increase the gross monthly pay of cement employees by Rs 5,000. “The CMA and the federation of major central trade unions (INTUC, AITUC, BMS, HMS, CITU and LPF) signed a major wage settlement pact before the Chief Labour Commissioner (Central), New Delhi, on February 20, 2019,” the statement said. The move is likely to benefit around 20,000 employees in the Indian cement industry, the CMA said in a statement. “It would to benefit around 20,000 cement workers by way of increase in gross pay, enhanced dearness allowance and service weightage,” the statement said. The present settlement is for four years, from April 1, 2018 to March 31, 2022, it said. Arrears for 11 months will be paid in two instalments. The settlement also provides for service weightage benefits, enhanced DA and other benefits, the CMA said.
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GLOBAL China confirms ban of Australian coal imports
China foreign ministry spokesman Geng Shuang said customs were inspecting and testing coal imports for safety and quality.
Customs at China’s northern port of Dalian has banned imports of Australian coal and will cap overall coal imports from all sources for 2019 at 12 million tonnes, an official at Dalian Port Group has told.
Atlantic coking coal: US prices up, India in focus
The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China prolong clearing times for Australian coal to at least 40 days. Australia’s ties with China have deteriorated since 2017, when Canberra accused China of meddling in its domestic affairs. Tensions rose again last month after Australia rescinded the visa of a prominent Chinese businessman, just months after barring Chinese telecoms giant Huawei Technologies from supplying equipment to its 5G broadband network. Coal is Australia’s biggest export earner and the Australian dollar tumbled more than 1 per cent to as low as 70.86 US cents. Asked if the ban was related to bilateral tensions,
18 | CCAI Monthly Newsletter February 2019
US coking coal export price rose in the past week, supported by rising Asia-Pacific marks and firm buying interest with market participants noting a strong focus on India negotiations in the past week. The Argus weekly fob Hampton Roads assessment for low-volatile coking coal is at $190.50/t, up by $3.50/t from a week ago. The assessment for highvolatile type A (HVA) coking coal is up by $4.50/t at $204/t fob Hampton Roads, while the high-volatile type B (HVB) assessment gained $3/t to reach $168.50/t. A European trader told Argus he has been waiting to place a cargo of US HVB with a European mill for a few weeks, but the mill has indicated that it is not yet ready to go ahead with a new purchase and the discussion is on hold. Indicative prompt offer levels were noted at $208/t fob for HVA and $172/t fob for HVB, and US export-
ers are unlikely to adjust target prices down given robust fundamentals and recent upward momentum in the Asia-Pacific market.
from fossil fuels to cleaner power sources. Dozens of countries such as Germany, Austria, Canada, Ghana and the Philippines are attempting to make the change.
U.S. production, use of refined South Africa will struggle to boost coal growing coal exports, even if it wants to: U.S. production of refined coal, coal processed to reduce emissions when burned, reached record highs Russell in 2017, and is expected to increase even more in 2018, the Energy Information Administration reports. Use of refined coal has increased despite the general decline in total U.S. coal consumption since 2008. For the first three quarters of 2018, EIA estimates refined coal production totaled 121 million short tons (Mmst), 21% of total U.S. coal production of 563 Mmst. According to Eia estimates, refined coal’s share of total coal tonnage consumed for U.S. electricity generation will increase from 15% in 2016, to more than 18% through October 2018. (EIA began collecting data on generation from refined coal in 2016.)
South Africa must end its coal habit. But it’s at odds about when and how South Africa’s power utility Eskom is in crisis. In recent weeks, this has been brought home to South Africa’s 58 million citizens as major power cuts hit the country. The blackouts have renewed focus on the power utility’s economic and technical problems. But Eskom’s problems point to the much bigger issue of a country struggling to map out a new energy regime – one that reduces its very high levels of dependency on coal in a way that doesn’t devastate people’s lives. South Africa is highly dependent on coal – almost 90% of its energy comes from coal-fired power stations. The urgency of change is clear on both global and local levels. Mining and burning coal is one of the most destructive activities on the planet. It represents an immediate threat to all forms of life and to scarce supplies of water, the degradation of arable land and toxic pollution of the air and water with extremely negative health impacts. South Africa isn’t the only country in the world attempting to adjust its energy mix by moving away
There may be some irony in climate change being blamed for an increase in weather delays that resulted in South Africa’s coal exports dropping 4 percent last year, but in reality the rough seas at the country’s Richards Bay terminal are the least of the industry’s worries. Shipments from Richards Bay declined to 73.5 million tonnes in 2018 from 76.5 million the prior year, well below the 91 million tonnes capacity of the terminal, which is the second-biggest in the world behind Newcastle Port in Australia. The terminal lost 36 days of loading last year because of rough weather, down slightly from 38 days in 2017, with both these years being considerably higher than in preceding years. But even if the terminal was fully available all 365 days of the year, it’s still unlikely that much more coal would have been shipped. The blame for South Africa’s lower exports was placed on market conditions by the head of Richards Bay Coal Terminal (RBCT), Alan Waller, with high prices crimping demand in the main export destination of India.
New Indonesian insurance rules trigger coal export delays Indonesian insurance rules that come into effect are being blamed for huge coal supply backlogs, with numerous ships being prevented from loading their cargo, as authorities conduct checks to determine if the vessels comply with the regulations. In mid-2018, the Indonesian government required exporters of coal and palm oil to obtain cover from local insurers beginning February 01. By May 2020, exporters will also be required to use Indonesian shipping
CCAI Monthly Newsletter February 2019
| 19
companies. Indonesia is the world’s largest exporter of thermal coal, with 25 million to 30 million tonnes per month headed to its main customers – India, China, Japan, and South Korea. Thermal coal is used mostly in electric power generation. According to Hendra Sinadia, executive director of the Indonesian Coal Mining Association, there will be a month-long trial period where exporters that do not comply with the insurance rules will not be penalised.
Coal expected to be Australia’s Indonesia’s coal price reference set at $91.8 per ton in February The government has set Indonesia’s coal price reference (HBA) for February at US$91.8 per ton, 0.6 percent lower than the reference in January of $92.41 per ton, in response to China and India’s ongoing protection policies. “Both countries will intensify the use of domestic coal,” Energy and Mineral Resources Ministry’s spokesperson Agung Pribadi said. Other factors include the price movement of the Indonesia Coal Index (ICI), the Newcastle Export Index (NEX), the Globalcoal Newcastle Index (GCNC) and January’s Platss 5900. February’s HBA is stipulated under Energy and Mineral Resources Ministerial Decree No.18 K/30/ MEM/2019 and will be used as the calculation basis for February’s direct sales of coal.
pressure from activist shareholders as part of a pivot towards minerals used in renewable technologies. The miner announced on night that, while it will continue mining thermal coal, which is used in power stations, and coking coal, which is used for making steel, it will limit production to current levels. Glencore will instead focus on metals such as cobalt, nickel, vanadium and zinc, which are all key components of batteries as it targeted lower carbon industries as its customers. “We aim to prioritise capital investment to grow production of commodities essential to the energy and mobility transition and to limit our coal production capacity broadly to current levels,” the company said as part of its results announcement. Glencore set its guidance for 2019 at 145 million tonnes of coal globally. Glencore said it would examine its membership of trade associations to ensure those groups aligned with the Paris climate agreement and Paris goals. These associations include the Minerals Council of Australia. The company told investors that it recognised the increasing risks associated with climate change.
Germany to import 45 million tonnes of hard coal this year Germany is expected to import 45 million tonnes of hard coal this year following closure of domestic mines.
The government has projected that this year’s production target will not be much different from 2018’s total coal production of 485 million tons — 25 percent of which is allocated for domestic market obligation (DMO).
That’s according to data from lobby group VDKI, which showed this will be a 1.4% rise from 2018 figures, as additional coal is purchased to ensure there is no shortage of supply, despite increasing amount of renewables coming onto the grid.
The government has also continued its policy to cap the coal price for electricity purposes at $70 dollar per ton, with the aim of maintaining the electricity price at the current level.
Around 30 million tonnes is expected to be used for power generation, with the other 15 million tonnes to be made up of coking coal and coke for steel-making.
Australia’s biggest coal miner moves to cap global output Australia’s largest coal miner Glencore will cap its global coal output at current levels in the wake of
20 | CCAI Monthly Newsletter February 2019
Germany’s last two hard-coal mines closed at the end of last year as part of a move to shift from unprofitable mining to imports.
CCAI Monthly Newsletter February 2019
| 21
6780
60.05
81.96
Source CEA
TOTAL
BHUTAN IMP
61.08
60.51
14
13
FEB-2019
1265000
91206.62
46.52
7133.77
2782.78
81243.55
4
ACTUAL*
74.15
62.3
15
ACTUAL SAME MONTH 2017-18
91952.51
0
5681.64
3378.33
82892.54
5
ACTUAL SAME MONTH 2017-18
FEB-2019
0 99.19
93.81
66.76
59.78
16
PROGRAM
63.22
61.01
17
ACTUAL*
125.56
82.37
98.01
7
% OF LAST YEAR (4/5)
64.73
59.51
18
ACTUAL SAME PERIOD 2017-18
1155345
4831
121689
34568
994257
8
PROGRAM
GENERATION (GWH)
25.28
106.06
78.21
93.64
6
% OF PROGRAM (4/3)
AN OVERVIEW
APRIL 2018 - FEB 2019
PLANT LOAD FACTOR (%)
97229
184
6726
5000
3558
38500
86761
3
PROGRAM
130000
ACTUAL*
NUCLEAR
HYDRO
2
1091500
PROGRAM
275052.07
0
THERMAL
Category
TOTAL
BHUTAN IMP
45399.22
NUCLEAR
HYDRO
222872.85
1
Monitored Target Capacity Apr 2018 to (MW) Mar 2019
THERMAL
Category
SUMMARY- ALL INDIA
ACTUAL*
10
ACTUAL SAME PERIOD 2017-18
1141988
4381.44
126219.91
34360.43
1100454.8
4778.33
119123.03
35182.1
977026.31 941371.39
9
PERIOD : February 2019
98.84
90.69
103.72
99.4
98.27
11
103.77
91.69
105.96
97.66
103.79
12
% OF % OF LAST PROGRAM YEAR (9/8) (9/10)
APRIL 2018 -FEB 2019
ENERGY GENERATION REPORT
IN PARLIAMENT GOVT. OF INDIA, MINISTRY OF COAL LOK SABHA Q. No. 572. Reliance on Coal 06.02.2019 DR. KIRIT P. SOLANKI : Will the Minister of COAL be pleased to state: (a) whether India’s reliance on coal will continue to be between 42 per cent and 50 percent even in 2047; (b) if so, whether this will have any impact on India’s commitments under the Paris Agreement; and (c) whether any steps have been taken to develop clean coal technologies and if so, the details thereof? ANSWER MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) Reply: (a): As per the India Energy Security Scenario calculator (IESS2047) which was launched in August 2015 by the NITI Ayog, the share of coal in primary energy is estimated to be in the range of 44.5% to 51.7%. (b): India’s NDC require 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030 based on enhanced installed capacity in renewable energy sector between 20212030; which is achievable. (c): To facilitate extraction of Coal Mine Methane, a policy framework has been put in place vide notifica-
22 | CCAI Monthly Newsletter February 2019
tion dated May, 2018 enabling Coal India Limted to extract Coal Mine Methane from its command areas. Further for gassification of coal, Ministry of Coal vide Gazette notification dated 20th Feb. 2014 has specified production of cement, syn-gas obtained through coal gassification and coal liquefaction to be end uses for the purposes of MMDR Act,1957. Government has also notified UCG Policy in Sep 2016 for development of UCG in India. Q. No. 729. AVERAGE CONSUMPTION OF COAL 06.02.2019 SHRI M. CHANDRAKASI: Will the Minister of POWER be pleased to state: (a) the total number of coal based thermal power plants in the country as on date and their average per day consumption/ requirement of coal for their operations; (b) the average coal stock availability for these plants in terms of coal availability for number of operative days at present ; and (c) the steps being taken to increase coal and coal stock availability for thermal power plants? ANSWER THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY
( SHRI R. K. SINGH ) (a) : The total number of coal based thermal power plants in the country as on 31.12.2018 is 175. Based on the generation target for the year 2018-19, the daily average coal requirement of these power plants is 1.79 Million Tonnes (MT)/day. During April-December, 2018, the average consumption by these power plants was 1.72 MT/day. (b) : As on 31st December, 2018, the total coal stock available with these power plants was 21.66 MT. Based on their average consumption of 1.72 MT/day, the average coal stock availability in terms of number of days is about 13 days. (c) : Government have taken the following steps to increase coal and coal stock availability for thermal power plants: i. The availability of coal is being regularly monitored closely to ensure that generation of power plant is not affected due to shortage of coal. ii. Coal Blocks have been allotted to central/state power utilities to improve domestic coal availability. iii. The Government has introduced a scheme SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India)-2017, to provide coal linkages to the power plants which do not have any linkage. iv. The Government has introduced flexibility in utilization of domestic coal amongst power generating stations to reduce the cost of power generation. The State/Central Gencos would have flexibility to utilize their coal in optimum and cost effective manner in their own power plants as well as by transferring coal to other State/Central/IPPs Power plants for generation of cheaper power. This ensures availability of coal to efficient plants. Q. No. 1733. Coal Imports 13.02.2019 SHRI E.T.MOHAMMED BASHEER: Will the Minister of COAL be pleased to state: (a) whether the coal import is increasing considerably in spite of the Government’s announcement that the coal import will be brought down to zero level and take our country on the path of self sufficiency; and (b) if so, the steps taken/being taken by the Government to address the issue? ANSWER MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a): Coal imports have fallen from 217.78 MT in 201415 to 203.95 MT in 2015-16 and further to 190.95 MT in 2016-17. During 2017-18, the coal import was 208.27 MT which was less than coal import for the
year 2014-15. (b): As per the current import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty. There has been a consistent effort to increase domestic coal production so as to reduce dependence on coal imports. The all India raw coal production has increased from 565.77 MT in 2013-14 to 676.48 MT in 2017-18. Absolute increase in all India coal production from 2013-14 to 2017-18 (four years) is 110.71 MT as compared to increase of coal production of 33.73 MT from 2009-10 to 2013-14 (four years). Coal India Limited (CIL) has also increased its production from 462.41 MT in 2013-14 to 567.36 MT in 2017-18 (four years), an absolute increase of 105 MT as compared to increase of coal production of 31.15 MT between 2009-10 and 2013-14 (four years). Further, in the current year during April-January, 2019, all India coal production was 568.40 MT with a growth rate of 7.9% and coal production of CIL was 469.65 MT with a growth rate of 6.6% over the corresponding period of previous year. However, coking coal will continue to be imported as there is limited availability of coking coal in the country. Further, power plants designed on imported coal will also continue to import coal.
RAJYA SABHA Q. No. 657. Scarcity of coal 08.02.2019 PROF. M. V. RAJEEV GOWDA: Will the Minister of COAL be pleased to state: (a) the details of complaints regarding the scarcity of coal since 2014, sector-wise and amount-wise; (b) the quantity of coal which is being wasted in the transportation through Railways since 2014; (c) the steps Government has undertaken to ensure efficient transportation of coal; and (d) the quantity of coal which has been auctioned by different coal mines since 2014 and losses incurred in the process, since 2014? ANSWER MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a): The seasonal deficiency of coal is reported from some sectors from time to time particularly during rainy season when production from open cast mines drops at the coal companies. Coal Companies take immediate steps to mitigate such situation. The CCAI Monthly Newsletter February 2019
| 23
sector-wise target and dispatch by Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) are given in Annexure-1(A). The all India raw coal production has increased from 565.77 MT in 2013-14 to 676.48 MT in 2017-18. Absolute increase in all India coal production from 2013-14 to 2017-18 (four years) is 110.71 MT as compared to increase of coal production of 33.73 MT from 2009-10 to 201314 (four years). Coal India Limited (CIL) has also increased its production from 462.41 MT in 2013-14 to 567.36 MT in 2017-18 (four years), an absolute increase of 105 MT as compared to increase of coal production of 31.15 MT between 2009-10 and 201314 (four years). (b): Details regarding wastage of coal due to transit/ transportation are not maintained by the Coal Companies/Zonal Railways. Coal is booked under ‘owner’s risk rate’ and as per section 97 of the Railways Act, 1989, Zonal Railways have no liability for pay transit loss unless it is due to negligence or misconduct on its part or on the part of any of its servants. In such case where loss is due to negligence or misconduct on its part or on the part of any of its servants, consumer can claim compensation from railway administration on whom a notice under Section 106 has been served. (c): CIL makes all efforts to increase the transportation of coal to the sidings and to reduce rake loading time so that overall loading can be increased. Besides supply through rail modes, the following measures have been taken to increase supply of coal: i. The Power Houses in close vicinity of the coal fields are advised to move coal through road mode ii. For proper utilization of Good sheds, the power Houses are advised to move coal through road cum
rail mode. iii. The captive modes of transport like MGR, Belts, Ropes are being fully utilized to their capacity to move coal to the concerned units. iv. Coal supplies to power sector is monitored regularly by an Inter-Ministerial Sub-group comprising representatives of Ministry of Power, Ministry of Coal, Ministry of Railways, Ministry of Shipping, NITI Aayog, CEA, CIL, SCCL etc. v. Coal rake loading at CIL source in 2018-19 (upto 31.01.2019) was 275.6 i.e. 6.9% growth from same period of the last year. Ministry of Railways has informed that the investment target for 2018-19 is Rs 1.46 lakh crore on capacity enhancement works to improve ability of Indian Railways to move freight traffic. Indian Railways is substantially increasing their fleet of rolling stock to meet coal movement and during 2018-19 (up to 31.12.2018), 6,405 wagons (including 3,245 BOXN and BOBRN wagons which are predominantly used for coal traffic) have been inducted into Indian Railways. The infrastructure enhancement works include the Eastern Dedicated Freight Corridor to substantially improve coal transportation from eastern part of the country to north India, doubling and third line work on the main coal corridor to facilitate coal movement from South Eastern Coalfields Limited (SECL), Mahanadi Coalfields Limited (MCL) and Western Coalfields Limited (WCL). (d) : The total quantity in Million Tonne (MT) offered, total successful bid quantity from different sources of CIL and SCCL and average % increase over notified value of coal of the total successful bid quantity through e-auctions from CIL and SCCL from 2014-15 to 2018-19 (up to 31.01.2019) is given in Annexure1(B).
Annexure -1 (A) Sector wise target and dispatch of Coal by CIL and SCCL Since 2014: 2014-15 Target Disp. Power 405.00 385.40 CIL Non- Power 113.81 104.58 Power 35.00 39.21 SCCL Non- Power 20.5 13.45 Com.
SECTOR
2015-16 Target Disp 430.00 413.11 118.95 121.52 36.00 47.33 20.00 11.22
2016-17 2017-18 2018-19 (upto Jan’19) Target Disp Target Disp Target Disp 450.99 425.40 452.24 453.63 399.16 401.23 147.05 117.1 148.95 126.66 107.82 95.81 47.24 50.66 50.86 53.33 44.72 44.70 10.76 0.13 11.13 11.30 10.03 10.79 (Fig in MT)
(B) The Quantity of Coal Auction by CIL and SCCL since 2014: Total Qty offered (in MT)
56.1
136.0
312.4
160.9
2018-19 ( Upto Jan’19 ) 76.1
CIL
Total successful bid Qty (in MT)
48.8
78.6
113.6
95.9
64.1
SCCL
(%) increase over Notified Value Total Qty offered (in MT) Quantity Sold (in MT)
61.1 5.51 3.14
33.5 10.46 3.33
20.5 6.14 2.13
50.2 7.10 3.56
82.0 6.91 3.06
(%) increase over Notified Value
130.42
18.38
25.61
155.70
125.80
Com.
E-Auction
24 | CCAI Monthly Newsletter January February2019 2019
2014-15
2015-16
2016-17
2017-18
MONTHLY SUMMARY OF DOMESTIC COAL Comparative Price of Domestic Coal: Power/Non-power. *The price shown in the Chart below is without: (a) Surface Transportation Charges. (b) State specific taxes. (c) Coal company or area wise charges if any. (d) Evacuation Facility Charges INR 50 per tonne w.e.f. 00:00 of 20.12.2017
GCV (Kcal/kg) (Mid-value)
G3-6400-6700
G5-5800-6100
G7-5200-5500
G10-4300-4600
G11-4000-4300
G12-3700-4000
Basic ROM price (Rs./te)
3144/ 3144
2737/2737
1926/2311
1024/1228
955/1145
886/1063
Tentative Ex-Mine Price*
4447/4447
3941/3941
2932/3411
1809/2063
1724/1959
1638/1858
coal Union cabinet approved sale of 25% of coal production from captive mines in open market with payment of additional premium on such sale. The cabinet committee on economic affairs has approved the methodology for allowing allocation of coal mines for specified end use or own consumption to sell 25% of actual production in open market with premium of 15% on such sale under the (Coal Mines Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act 1957, an official said. With only a month left in the current financial year, Coal India is unlikely to meet its annual output target of 652 million tonne (mt) due to production issues in key mines of its core subsidiary, Mahanadi Coalfields (MCL). Even if Coal India produces 2 mt of coal daily despite MCL suffering huge production losses, the state-owned miner’s total production will be in the range of 580-590 mt by FY19. Coal India’s e-auction prices rose about 53% in the December quarter, when the company offered half the quantity it did a year ago after diverting supplies to power plants. It offered 14.65 million tonnes of coal during the quarter against 30.8 million tonnes a year earlier. As a result, average prices rose to Rs 2,847 per tonne from Rs 1,859 per tonne. Coal India increased supplies to power, its priority sector, at the cost of other customers.
RAIL Indian Railways big boost! Railway operations in Kusunda-Sonardih of Dhanbad–Chandrapura section are set to be opened for goods and passenger trains. There is a reason that sets apart this reopening operation from the rest – the 34-km-long Dhanbad-Chandrapura rail route in Dhanbad Railway Division under the East Central Railway’s (ECR’s) was closed due to the reported underground coal mines fire. The loading of coal at New Mangalore Port has helped the Palakkad division of Southern Railway to record growth in freight loading during the current financial year. The total freight loading in Palakkad division stood at 5.039 million tonnes during April-January of 2018-19 as against the target of 4.762 million tonnes, recording a growth of 5.8 % against the target.
CCAI CCAIMonthly MonthlyNewsletter NewsletterFebruary January 2019
| 25
power Coal stocks at power plants and mine pitheads have risen to a total of 60 million tonnes, enough to generate electricity for 36 days, ending scarcity that lasted several months. Power sector executives say lower demand in recent winter months helped reduce fuel consumption, which increased stocks. Union minister of state for power R K Singh said the country was on path to achieve 100% household electrification by March 31, 2019 and the next goal would be for 24/7 power for all households. The Chhattisgarh State Electricity Regulatory Commission (CSERC) announced reduction in power tariffs, which will benefit 91% of domestic consumers in the state. The new tariffs would come into effect from April 1. The commission has slashed tariffs for all categories for domestic consumers.
CEMENT
Domestic cement demand is expected to register a modest growth of 6-8 percent in fiscal 2020 mainly driven by the diminishing base effect, increased thrust on infrastructure by the Central government and the affordable housing segment, the report said. Maintaining a stable outlook for the sector, India Ratings report said that cement manufacturers are poised to benefit from the continuing demand push, led by the healthy growth expected across end-markets such as individual home building, affordable housing, roads and irrigation sectors. After Builders Association of India (BAI), Confederation of Real Estate Developers Association of India hits war path over unprecedented hike in cement prices. The CREDAI Andhra Pradesh chapter on Thursday, expressed concerns over the same as it would bring the construction activity to a standstill, and the builders will not be able to meet the additional expenditure being incurred due to rise in the cement price.
steel Import of stainless steel from Indonesia into India has grown nearly nine times from nearly 8,000 tonne in 2017-18 to 67,000 tonne in 2018-19 (annualized basis),with Chinese producers ramping up capacity in Indonesia according to Indian Stainless-Steel Development Association (ISSDA) which has highlighted mis-declarations by exporters from ASEAN countries such as Indonesia, Malaysia, Singapore, Thailand, and Vietnam to avail preferential tariff under the FTA, to the Government of India. The country’s exports of finished steel fell 37.3% to 5.15 million tonnes (MT) in the April-January period of the current financial year, according to official data. The country had exported 8.22 MT of finished steel during the corresponding period a year ago, the Joint Plant Committee (JPC) said in its latest report. The imports of the total finished steel grew 1.5 % to 6.55 MT during April-January of 2018-18, compared with 6.45 MT in the year-ago period. Domestic steel firms set to hike prices by Rs 1,000 a tonne from March 1. Prompted by strong demand growth in the domestic market, steel producers are set to hike product prices by Rs 1,000 a tonne from March 1. This will be the third rise in prices since February 1. “There is a growing demand for steel across sectors, and so all large producers are going ahead with a yet another price hike,” said an industry source in the knowledge of the development.
26 | CCAI Monthly Newsletter February January 2019 2019
Overall Domestic Coal Scenario Coal Production (in MT) Company
January, 2019
January, 2018
% Growth
April 2018January, 2019
April 2017January, 2018
% Growth
CIL
54.1
54.6
-0.9%
412.5
383.9
7.4%
SCCL
6.0
5.7
6.4%
45.6
42.0
8.5%
Overall Offtake (in MT) Company
January, 2019
January, 2018
% Growth
April 2018– January, 2019
April 2017– January, 2018
% Growth
CIL
52.8
53.4
-1.2%
444.6
421.4
5.5%
SCCL
6.1
6.0
2.1%
49.1
46.7
5.2%
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
January, 2019
December, 2017
% Growth
April 2018– January, 2019
April 2017– January, 2018
% Growth
CIL
42.4
41.6
1.9%
360.0
333.4
8.0%
SCCL
5.0
4.9
1.8%
40.0
38.7
3.3%
Spot E-auction of Coal (in MT) Company
Coal Qty. Allocated January, 2019
Coal Qty. Allocated January, 2018
Increase over notified price
Coal Qty. Allocated April 2018January, 2019
Coal Qty. Allocated April 2017January, 2018
Increase over notified price
CIL
1.00
5.24
111%
18.84
31.71
89%
Special Forward E-auction for Power (in MT) Company CIL
Coal Qty. Allocated January, 2019
Coal Qty. Allocated January, 2018
Increase over notified price
Coal Qty. Allocated April 2018January, 2019
Coal Qty. Allocated April 2017January, 2018
Increase over notified price
-
-
-
21.91
27.43
79%
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated January, 2019
Coal Qty. Allocated January, 2018
Increase over notified price
Coal Qty. Allocated April 2018January, 2019
Coal Qty. Allocated April 2017January, 2018
Increase over notified price
CIL
0.62
-
37%
7.93
10.78
63%
Company
Coal Qty. Allocated January, 2019
Coal Qty. Allocated January, 2018
Increase over notified price
Coal Qty. Allocated April 2018January, 2019
Coal Qty. Allocated April 2017January, 2018
Increase over notified price
CIL
1.50
-
101%
2.00
0.35
89%
Special Spot E-auction (in MT)
CCAI CCAIMonthly MonthlyNewsletter NewsletterFebruary January 2019 2019
| 27
MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL
(kcal/kg)
Monthly Price - FOB
Monthly Price - FOB
Monthly Change (USD)
South Africa South Africa Australia Indonesia Indonesia USA
6000 NAR 5500 NAR 5500 NAR 5000 GAR 4200 GAR 6900 NAR
USD 84.73 USD 60.91 USD 61.94 USD 55.46 USD 36.66 USD 64.59
INR 6035 INR 4339 INR 4412 INR 3951 INR 2611 INR 4601
-7.71 -3.81 -1.56 5.49 3.83 -1.25
PET COKE
Sulphur
India-RIL(Ex-Ref.) Saudi Arabia (CIF) USA (CIF)
-5% + 8.5% - 6.5%
Price INR 8850 INR 6518 ($92) INR 6821 ($96)
Exchange Rate
Change (Monthly)
USD/INR 71.233
0.24
Coking Coal Price: Semi Soft
Low Vol PCI
Mid Tier PCI
FOB Aus
Premium Low Vol CFR China
FOB Aus
HCC 64 MID Vol CFR China
FOB Aus
FOB Aus
FOB Aus
CFR India
FOB N China
207.66
206.88
179.44
189.56
116.73
125.26
123.26
342.00
329.00
South Africa: • South African thermal coal prices have continued to recover, with positive indicators stemming from increased demand, while logistical issues added further upward momentum to physical prices. The extra demand was mainly coming from returning Indian buyers, sources said. • The volume of South African thermal coal exports in January totaled 4.87 million mt, a drop of 37% month on month and down 21% year on year, making it the lowest monthly volume since July 2017, according to customs data released late. India remained the largest receiver of South African coal in January with a volume of 1.49 million mt. However, that volume was down 55% month on month and 45% year on year, making this the lowest export volume to India since January 2017.
Australia: • Heavy monsoon rains in Australia are impacting the operations of coal terminals with Abbot Point suspending berthing operations and cargo delays at other facilities. The North Queensland, Australia
28 | CCAI CCAI Monthly Monthly Newsletter Newsletter January February2019 2019
MET COKE 62% CSR
has experienced record heavy rainfalls with over one metre of rain falling in Townsville over the last 10 days. According to ship agency GAC the berthing of vessels at Abbot Point coal terminal has been suspended on a daily basis due to the weather conditions and this being reviewed on a daily basis. • Chinese coal traders have stopped ordering Australian coal as clearing times through China’s customs have doubled to at least 40 days, according to major buyers in China and international coal merchants, resulting in a sharp fall in Australian prices. • Coal’s perfect storm hits $70 billion Australian projects. It’s been a tough few weeks for Australian coal industry. First there was a court ruling blocking a new mine on climate change grounds, then one of the world’s largest producers, Glencore, capped output growth, and finally China was seen to be slowing down Australian imports. The developments are symptoms of the fossil fuel’s decline and likely signal headwinds for the industry. Australia, which is the world’s second-biggest supplier of coal used for power generation and steel making, has some $70 billion of new coal projects in the pipeline, according to government estimates.
Indonesia: • The government has set Indonesia’s coal price reference (HBA) for February at US$91.8 per ton, 0.6 percent lower than the reference in January of $92.41 per ton, in response to China and India’s ongoing protection policies. “Both countries will intensify the use of domestic coal,” Energy and Mineral Resources Ministry’s spokesperson Agung Pribadi saids. • Coal miners in Indonesia will have to increase their allocation to the domestic market for 2019, a spokesman for the Energy and Mineral Resources Ministry said. The new DMO for 2019 is 128 million mt, up from 121 million mt in 2018. The ministry set a 2019 coal production target of 490 million mt, meaning miners will have to supply around 26% of production domestically. • Indonesian and Russian coal exports to China will benefit from import restrictions on Australian coal at some northern Chinese ports, market sources said. Sources in China told that a meeting of Chinese port officials, held Wednesday near Dalian port, decided that only cargoes from Indonesia and Russia would be allowed into five northern ports, namely, Dalian Bay, Bayu Quan, Panjin Port, Dandong, and Beiliang Port.
USA: • US coal production was forecast to total 722 million st in 2019, down 4.3% from 2018 production of nearly 755 million st, US Energy Information Administration data showed. In 2020, the EIA predicts production of 682 million st, down 5.6% from 2019 expectations, according to its Short-Term Energy Outlook. US coal output has not fallen below 700 million st since 1978 with 670.2 million st. • US coal carloads totaled 86,854 in the week ended February 23, up 8.4% from the prior week for the third week in a row, American Association of Railroads data showed. Additionally, carloads rose 1.3% from the year-ago week, the first rise year on year in five weeks. From the five-year average of 90,758 carloads in the eight week of the year there was a 4.3% deficit, the smallest drop from the average since the second week of the year.
Pet Coke: • US fuel-grade petcoke exports totaled 3.23 million mt in November, up 37% from October and the most since 3.29 million mt were exported in March, US Census Bureau data showed. The latest month was up 27.1% year on year and the highest in a month of November in over 13 years. Calcined petcoke exports were at 300,861 mt in November, up 40.3% from a month earlier and 3% higher than the year-ago month. • Rising freight rates are keeping US seaborne petcoke buyers on the sidelines even as landed cost gets expensive, according to market sources. A south India-based trader said the demand for US petcoke is stable with last week. He was hearing offers for Supramax cargoes of US petcoke at $95-$96/mt CFR India, while bids were heard at $92/mt CFR India.The Supramax freight rate from US Gulf Coast to East Coast India was pegged at $33.75/mt Tuesday, up $5.25 week on week.
Shipping: • Indian ports are expected to record six to eight % growth in cargo volumes in FY19, backed by drivers like coal, crude oil and containers. Ports across the country handled 1209 million tonnes of cargo in 2017-18, achieving seven % over the previous year. The sagging coal imports which had raised concerns for ports dependent on the dry fuel, have staged a rebound. The momentum in coal imports seen in the first half (April-September) of this fiscal is set to continue through the year, auguring well for the port operations. • Benchmark Newcastle coal prices remained relatively flat this week, despite revelations customs delays for Australian coal imports at some Chinese ports have blown out to 40 days. Broker Global Coal’s Newcastle index was seen marginally higher on the week at USD 94.94/t, up USD 0.23 relative to last Thursday. In physical trading, a 25,000t cargo for May delivery changed hands for USD 96.50/t. Prices have held up over the past fortnight despite revelations customs officials at northern Chinese ports have been delaying coal imports for weeks to conduct additional quality controls.
CCAI CCAIMonthly MonthlyNewsletter NewsletterFebruary January 2019 2019
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PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) FEB'19
SUB CO. ACTUAL THIS YEAR
APR'18 - FEB'19
ACTUAL SAME % PERIOD LAST GROWTH YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH 15.5
ECL
5.27
4.85
8.7
43.36
37.55
BCCL
2.85
3.14
-9.2
27.31
28.61
-4.6
CCL
7.01
7.52
-6.8
55.52
50.44
10.1
NCL
8.34
7.78
7.2
92.21
83.95
9.8
WCL
5.88
5.34
10.2
44.12
38.28
15.3
SECL
14.12
13.33
5.9
138.45
129.24
7.1
MCL
14.48
12.36
17.1
126.09
126.36
-0.2
NEC
0.09
0.15
-42.5
0.64
0.65
-2.5
CIL
58.05
54.48
6.5
527.7
495.08
6.6
OFFTAKE (Figs in Mill Te) FEB'19
SUB CO. ACTUAL THIS YEAR
APR'18 - FEB'19
ACTUAL SAME % PERIOD LAST GROWTH YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
ECL
4.82
4.47
7.6
44.59
38.53
15.7
BCCL
2.59
2.96
-12.4
29.92
29.89
0.1
CCL
6.03
6.09
-0.9
61.2
61.13
0.1
NCL
8.05
8.05
0
92.75
87.68
5.8
WCL
5.13
4.17
23.2
50.01
43.99
13.7
SECL
13.06
12.82
1.9
141.26
137.84
2.5
MCL
11.66
11.25
3.7
128.11
125.24
2.3
NEC
0.11
0.14
-22.5
0.65
0.75
-13.1
CIL
51.45
49.94
3
548.49
525.04
4.5
30 | CCAI Monthly Newsletter February 2019
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