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Vol. XLVIII No. 03 Published on : 28.06.2019
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From the Editor’s Desk
Coal stock position at power plants has improved in last few months due to lower power demand. Industries are also having healthy coal stock due to fas ter rake movement. Coal sup ply may be disrupted at times due to advent of monsoon. Though awareness regarding supply of coal of allotted qua ntity has increased manifolds due to continuous monitoring of the Ministry and the facility of Thi rd Par ty Sampling and Analy sis but at specific mines/sidings of Subsidiary Coal Companies consumers are facing the issu e of quality variance in the gra des allocated to them.
Coal India has increased its pro duction target in FY 2019-2 0 by more than 8 per cent from the last year and to achieve it the miner has already signed ma ndatory MOU with MoC for its key performance areas for 2019 -20. However, production gro wth of CIL has been marginal in the first quarter of current fiscal. In spite of best efforts made by CIL and Subsidiaries, coal impor t had touched nearly 235 millio n tonnes in 2018-19. Coal Ministry has said that the cou ntry is not self sufficient so far due to limited availability of coking coal in the country, an essent ial input for steel making indust ries. Power plants designed on low ash foreign coal will also con tinue to impor t coal. To reduce dependence on im por ted coal, Coal India may offer 21.5% additional coal this fisc al to power generators throug h Forward e-Auctions while Spo t e-Auction offerings may be reduced by almost 4% from 2018-19. Non-power sector may be offered approximately 64 million tonnes of additional coa l for long-term supply contracts through an auction mechanis m. The major reason for surge in impor t of coal can be attribute d to continuous meltdown of glo bal coal prices across the cou ntries. For example South Africa 60 00 NAR and 5500 NAR pri ces have decreased by approxim ately 34% and 24%. USA 60 00 NAR price has also decreased by nea rly 20% in last 6 months. The price drop may be benefic ial to those organisations wh ich are mostly dependent on im por ted coal instead of indige nous one. It may also impact the profit margin of different e-A uctions conducted by the Indian coa l behemoth. Happy reading......
4 | CCAI Monthly Newsletter June 2019
Content Vol. XLVIII No. 03 June, 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.
20 |In Parliament
16 Global
28 |Monthly Summary Of Domestic Coal Monthly Summary Of Imported Coal & 30 | Petcoke
32 |Overall Domestic Coal Scenario 33 |Energy Generation Report CCAI Monthly Newsletter June 2019
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CONSUMERS’ PAGE Present Coal Scenario Coal India has increased its production by around 0.5 per cent in June 2019 to 45.08 mt compared with 44.87 mt in the same period last year. However, there is a marginal growth of 0.1 per cent in coal production at around 136.96 million tonne during the April-June 2019 period against 136.85 mt in the same period last year. Coal offtake was down by nearly 1.6 per cent to 48.86 mt in June this year as compared to last year. Total offtake for the period of April-June 2019 was marginally lower by around 0.1 per cent to 153.29 mt against 153.47 mt during the same period last year.
Consumers’ Concern 1. Coal Stock Position Power plants in the country are maintaining healthy coal stock. Hardly any power plant in the country is in critical or supercritical coal stock situation of late. Increased coal supply has reduced the coal crisis for Non-power Sector as well and Railways are trying to clear the arrear position in haste.
vinda & Churcha Mines of SECL, Hingula, Garjanbahal & Lajkura Mines and Sardega-Siding & Kanika Siding of MCL, Magadh & Amrapali Mines of CCL, DBCP-Siding of Pandaveswar Area and Sonepur Bazari Area of ECL and Tawa1 & Tawa- 2, Chhattarpur- 1 and Neharia Mines of WCL.
2. Coal Quality issues
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 the said sources.
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 Jampali, Go-
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3. Request to formulate a suitable methodology and implement the approval of MoP regarding Nonlapsing of short supplies of coal to Power Plants in the lapsable category
the required amount to the Referee Laboratory for analysing the samples they have challenged but due to non-receipt of analysed reports entire reconciliation procedure is held up at the Subsidiary Coal Companies. Subsidiaries have asserted that they would release the reports shortly.
Power sector consumers have requested Coal Ministry, Railway Board and CIL for formulation of suitable methodology and implementation of the MoP approval (notice dated 08.03.2019) regarding Non-lapsing of short supplies of coal so that these consumers can maintain safe coal stock level at their plants and eventually be prepared for such difficult situation in future as well.
5. Request for conducting Exclusive e-Auctions from WCL
4. Non-receipt of Referee Analysis Report and reconciliation from CCL & NCL and request for formulation of a suitable policy for all Subsidiaries Consumers procuring coal from CCL & NCL have not received Referee Analysis Reports since long. Though they have already deposited
CIL has been requested for formulation of a suitable policy so that such situation does not arise in future.
Due to shortfall in FSA coal, consumers are highly dependent on purchase of indigenous coal from different auctions. Though other subsidiaries are conducting auctions for their customers and WCL has also conducted Special Forward e-Auction for Power Sector consumers in April 2019 but not been able to commence the same for Non-power Sector. Hence, consumers have urged WCL to conduct Exclusive e-Auction for Non-power Sector including CPPs so that they can fulfil their production target.
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POWER 37,700 MW of power plants left with 1-5 days of coal stock Thermal plants with a capacity of 37,700 MW are left with coal stocks enough to generate power for barely 1-5 days because of higher demand for electricity. These power stations are not being regarded as plants with “critical” stocks because Coal India has supplied almost their full quota. There are a few plants which have received more than their contracted quantity for the period. Plants are marked critical when Coal India or the railways have issues in sending coal to these plants. They receive special attention from the government, which tries to send additional quantities to these plants to replenish stock positions.
month. During June, supplies from wind power generators declined around 15% against May this year, while supplies from solar and hydel increased 52% and 5% respectively, requiring coal-fired power generators to increase supplies by 9% during the month, prompting them to use up stocks.
How low prices prevent India from supplying power 24x7 to all homes India mined more coal, built more power plants, and distribution companies connected millions of homes to the grid over four years to 2019. But those companies are now saddled with a record debt that hinders a key government promise.
According to fuel supply agreements, a set of plants are to receive at least 90% of their annual contracted quantity and the rest would receive 75% of the contracted quantity. Almost all plants with low stocks have received between 63% and 124% of their annual contracted quantities.
“24x7 power” is the government’s priority, India’s new power minister Raj Kumar Singh said on May 30, 2019. His predecessor, Piyush Goyal, declared India “power surplus” two years ago, and a government dashboardsays 99.99 per cent of rural homes--which account for nearly 7 in 10 Indian homes--now have grid power.
Data compiled by the National Load Despatch Centre shows demand for power has risen 6-7% this year and is hovering around 170 Gw each day of this
At the root of the contradictions between almost-universal electrification, “surplus” electricity and the inability to supply it around-the-clock to Indian homes
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is a debt that burdens state-owned electricity distribution companies (DISCOMs) nationwide, impairing their ability to build and maintain power grids and equipment. The inability or refusal of state governments to increase power bills, as we explain later, has led to more borrowing and power shortages and made DISCOMs reluctant to buy available electricity, which means continuing blackouts and erratic power supply. This debt will reach Rs 2.6 per cent ($37 billion) by 2020, according to a May 2019 study by Crisil, a market research agency. When that happens, the debt will be the same as in 2015, which is when the Ujwal DISCOM Assurance Yojana (UDAY), the government’s bailout programme for DISCOMs, began.
Increased power supplies keep prices under control: IndRa Increased power supplies from various sources, in comparison to demand, has subdued its prices at the exchanges over the last two months, India Ratings & Research has said in a recent release. According to Ind-Ra, short-term power prices did not see any major movement during May 2019, as hydro generation remained strong due to a better snow season in FY19. Coal availability with thermal generators has also improved, with coal inventory increasing almost 99% year-on-year to 31.6 million tonnes (mt) in April 2019 (April 2018: 15.9mt). Coal production increased 1.0% year-on-year to 45.3mt in April 2019. With improvement in coal inventory, the number of power stations with subcritical levels of coal inventory decreased to two in April 2019 from 28 in April 2018. Improvement in private sector capacity utilisation can be attributed to improvement in Adani Power Limited’s Mundra plant’s owing to reduction in their coal costs. Capacity utilisation of the Mundra plant, which has a capacity of 4620MW, rose to 83.43% in April 2019 (April 2018: 3.88%). Plant capacity utilisation of central and state sector declined 170bp and 300bp, respectively, in April 2019.
May spot power price falls 29 pc to Rs 3.34 per unit
Average spot power price fell by 29 per cent to Rs 3.34 per unit in May compared to the year-ago month, the Indian Energy Exchange (IEX) said. With trading of 3,772 million units (MU) of electricity, the volume in the day-ahead-market (DAM) fell 6 per cent on month-on-month basis, while the fall was 23 per cent on year-on-year basis. On a daily average basis, around 122 MUs were traded in May 2019, the exchange said. “The average Market Clearing Price (MCP) at Rs 3.34 per unit (in May 2019) declined 29 per cent over 4.67 per unit in May 2018 mainly on account of reduced demand in the short-term market,” the IEX said. Among the key reasons for decline in volume is the fact that availability from long term sources was higher in May 2019. Hydro, wind, solar and coal generation availability was higher by 31 per cent, 32 per cent, 48 per cent and 2.5 per cent, respectively, IEX said citing National Load Dispatch Centre (NLDC) data.
Power producers want CIL to step up coal supply through rail wagons to reduce transportation cost Power generating companies have asked state-run Coal India to increase the supply of the dry fuel from Korba area in Chhattisgarh through rail wagons to help them reduce transportation cost as well as tariffs for end-consumers. Korba region serves 20 per cent of the domestic coal supply but Coal India-arm South Eastern Coalfields Ltd (SECL) is able to meet only 55 per cent of its demand from the region through rail, according to Association of Power Producers (APP). The APP in a letter to Coal India chief Anil Kumar Jha mentioned that power producers are incurring around 25 per cent higher costs to move coal by road as against rail mode. Against a demand of 45 rakes per day, Korba area is currently loading only 25 rakes per day, the APP said. Due to lack of supply through railways, power producers are compelled to bank on inefficient and expensive truck transportation for coal procurement. One rake can load 4,000 tonnes of coal, which means producers have to ply 135 trucks carrying 30 tonnes each.
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The SECL controls Chhattisgarh Korba coal field that produces close to 130 million tonnes of coal that can fire 32,000 MW of electricity generation capacity. India has close to 200GW of power generation capacity dependent on coal that often struggles to procure the desired quality and quantity of fuel in a time-bound manner. The APP has said that electricity consumers are compelled to pay higher tariffs since this cost burden is passed on to them.
Uttar Pradesh power utility proposes 25% hike in electricity tariffs Power utility Uttar Pradesh Power Corporation Limited (UPPCL) has proposed hiking electricity tariffs by more than 25 per cent for domestic consumers, moving after Lok Sabha elections got over, Against the prevailing power tariff of Rs 4.90 per unit for the first 150 units of monthly consumption, UPPCL has proposed to increase the slab by more than 26 per cent to Rs 6.20 per unit. Similarly, the variable slab for power consumption between 151-300 units, 301-500 units and 500 units upwards have been proposed to be increased by 1220 per cent to Rs 6.50 unit (Rs 5.40 at present), Rs 7 per unit (Rs 6.20) and Rs 7.50 per unit (Rs 6.50) respectively. Additionally, the fixed monthly charge for a domestic connection is also proposed to be upped by 10 per cent.
to consider issuing the advisory to regulators for immediate relief to projects bid transparently in or outside insolvency court. A provision is also proposed to be made in draft tariff policy, which will require cabinet nod. This is the first time the Centre will intervene in clearing hurdles in way of resolution of stressed assets even as revival proposal for many such projects including steel and cement plants are facing various regulatory and legal challenges. “Renegotiating tariffs by amending power purchase agreements (PPAs) when a stressed project is sold has become a concern. Such efforts could impair resolution of stressed power plants as new investors will lose incentive to buy projects. The Centre may look into the issue and if need be issue an advisory to regulators for speedy resolution of stressed power projects, till the time a permanent provision is made in tariff policy,” the official said.
Power tariffs: Regulators delay new orders amid rising discom stress Despite financial losses of state-owned electricity distribution companies (discoms) rising 44% annually to Rs 21,658 crore at the end of FY19, electricity regulators of most major states have either delayed or announced meagre tariff hikes that would exacerbate the discoms’ financial woes in FY20.
Besides, the power tariffs for the state commercial sector consumers have also been proposed to be hiked by 10-15 per cent.
As it is, limited or no tariffs hike was proposed by most of the discoms when they filed for tariff revision during the run up to the Lok Sabha elections.
Power regulators may be told not to lower tariffs of stressed plants
Only 15 states have issued tariff orders so far and that exclude major power consumers such as Uttar Pradesh, Maharashtra, Telangana, Tamil Nadu, Rajasthan and Madhya Pradesh.
The power ministry is considering issuing an advisory to electricity regulators asking them to abstain from lowering tariffs of stressed power plants that change hands as part of lenders’ resolution mechanism. The move, followed by a softened Reserve Bank circular issued, is aimed at immediately lifting investment sentiments in the stressed power sector and help banks in completing resolutions quickly. A senior government official said the ministry is likely
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Even though the state regulators of Jharkhand, Bihar, Chhattisgarh, Andhra Pradesh, Odisha, Haryana and Gujarat have come up with FY20 orders, they have not raised tariffs, potentially widening the gap between the cost of supply and revenue realised against every unit of electricity (ACS-ARR gap).
New norms for discoms to secure payment to gencos
Distribution companies (discoms) will no longer be able to get away without paying for the power they procure for supplying to consumers. The power ministry is ushering in a payment security mechanism on the principles of the pre-paid system to ensure prompt payment to generation companies (gencos). This is part of structural changes being implemented by power minister R K Singh to address issues facing the sector and attract investments needed for improving quality of life with reliable and sustainable electricity supply. “We have to find lasting solutions (to issues). How long can this system carry on where we have to remonetise discoms, only for them to be back to square one a few years later. The new mechanism will force discoms to improve billing and collection as well as overall efficiency,” power minister R K Singh told TOI. A mounting pile of gencos’ unpaid bills has caused financial stress to many power projects, forcing some even to the brink of bankruptcy. The ministry’s PRAAPTI portal pegs generators’ total outstanding amount at Rs 35,845 crore at the end of April.
Renewables sector awaits a multi-pronged policy to resume strong growth trajectory As the renewable energy sector faces a slowdown, industry representatives and experts seek a multidimensional policy framework from the new government to restore market confidence and put the sector back in the strong growth mode. The renewable energy sector added less than 60 per cent (about 8600 MW) of its targeted capacity of 15,602 MW in 2018-19. This was the slowest addition in recent years. In the previous two years, the sector added new capacity to the tune of 11,000-12,000 MW annually, supported by a boom in the solar power sector. The solar segment added just 6530 MW, including 5796 MW of ground mounted and 733 MW of rooftop, new capacity, as against the total target of 11,000 MW in 2018-19. Also, the wind segment added just about 1500 MW as against the target of 4000 MW.
duty, the GST and BIS implementation issues, project delays, tender cancellations, and policy reversals, among others, resulted in the slow growth of the sector in the recent quarters.
Govt to invoke special powers, save green projects of Rs 40,000 crore The government is set to use special powers under the Electricity Act of 2003 to ensure regulatory passage for a clutch of inter-state transmission lines with the objective of preventing solar and wind power projects worth Rs 40,000 crore from getting stranded. Top government sources told TOI the power ministry will invoke Section 107 of the Electricity Act to ask Central Electricity Regulatory Commission (CERC) to allow central utilities to build the transmission lines for evacuating power from 8 GW (giga watt) of green energy projects slated to be commissioned from October 2020. The sources said the directives will cover transmission lines required by the end of 2020 in Phase - I for 12.5 GW, including the 8 GW under way, of renewable projects under implementation or tendered as well as 16.5 GW projects approved under norms prevalent till June 2018. Section 107 allows the Centre to declare projects to be of public/national importance and issue executive directive to regulators to clear them for implementation by central utilities. The ministry’s hand was forced after CERC refused to clear these transmission lines on the ground these were finalised under the process followed before new norms, ‘Regulation for Transmission Line Planning’, was notified last June. When approval was sought for transmission tariff of these lines, CERC sent them back for approval under the new process. This would have taken nearly a year, by which time the renewable projects underway would have started coming on stream but the investments would have been stranded due to the absence of power evacuation infrastructure.
While the industry is optimistic about the future potential of the sector, the imposition of safeguard CCAI Monthly Newsletter June 2019
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DOMESTIC India imported coal worth Rs 1.7 pliant firms forced to pay Rs 833-crore fine lakh cr in FY’19 India imported 235.2 million tonne (MT) of coal in 2018-19 valued at Rs 1.7 lakh crore, Parliament was informed. During 2017-18, the country imported 208.2 MT of the dry fuel valued at Rs 1.3 lakh crore, Coal Minister Pralhad Joshi said in a written reply to Lok Sabha. In 2016-17, the minister said, India imported 190.9 MT of coal valued at Rs 1 lakh crore, the minister said. Joshi further said “despite the efforts made by coal sector, the country is not self sufficient because there is limited availability of coking coal in the country, which is an essential input for steel making.” Further, power plants designed on low ash imported coal will also continue to import coal for their requirements, he said. The total estimated coal resources in the country is 319.02 billion tonne. Every year about 3-5 billion tonne of proved resources were being added through fresh exploration of the coal inventory in India.
Captive coal mines: Non-com12 | CCAI Monthly Newsletter June 2019
The government has deducted Rs 832.53 crore from the performance security of the captive coal mine-owning companies which did not meet efficiency parameters. “So far, 134 show-cause notices have been issued for deviations from the scheduled time lines stipulated in coal mine development and production agreement/allotment agreements,” coal minister Prahlad Joshi said in aresponse to a question tabled in Parliament. Captive coal mines produced 25.1 million tonnes (MT) of the fuel in FY19. Though this figure is 55% higher than the production level of the previous fiscal, it is still much lower than the peak output of 43.2 MT in FY15, when 42 blocks were operational. The Gare–Palma– IV/8, Dulanga, Barjora, Ardhagram, Tadichelra – I blocks started producing coal in FY19 after remaining stranded in the previous two fiscals. The Supreme Court, in its September 2014 order, had cancelled 204 captive coal block licences, saying that these had been allocated in an illegal and arbitrary manner. As many as 84 coal mines have
been allocated so far after the cancellation of the coal blocks, out of which less than 25 are operational right now.
STEEL
India’s May steel exports drop to lowest in 3 yrs India’s finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank, preliminary government data reviewed by Reuters showed. India exported 319,000 tonnes of finished steel in May, down 28% from the same month last year and the lowest level since April 2016, the data showed. Steel exports to the EU dropped 55% in May, led by fewer shipments to Italy, Belgium and Spain, which together made up about 80% of India’s overall exports to the region. That comes amid ‘safeguard’ measures by the EU that are designed to limit incoming steel and prevent a surge of imports as a result of Washington’s 25% import tariffs, which have effectively closed the U.S. market. Indian exports to Italy slumped 65% to 23,000 tonnes, according to the data. Exports to Spain fell 41% to 13,000 tonnes, while shipments to Belgium were down 42% at 25,000 tonnes. India, which typically ships cold-rolled coil, galvanized steel and some long products such as bars and rods to the EU, saw a decline in these shipments by as much as 30%.
Govt to take steps to contain imports of defective/sub-standard steel The government will take more steps to contain imports of defective or sub-standard steel with a view to helping domestic manufacturers, an official said. The official said that local players prefer imports of defective or sub-standard steel as it is cheaper. According to industry experts, sub-standard steel impacts the quality of goods and hurt domestic manufacturers.
The issue was discussed during a high-level meeting of steel and commerce ministries. “There is a need to contain imports of defective and sub standard steel. It comes in India because it is cheap in price,” the official added. There are already quality control guidelines for various steel products used in various industries to check imports of sub-standard items. It was also decided to provide steel at affordable rates to engineering exporters, which have complained that the domestic steel makers charge huge margins from them. Engineering exporters use steel as a raw material to manufacture products for export purposes. According to the exporters, high prices of domestic steel, a crucial raw material, as compared to international market, has resulted in non-competitiveness of Indian downstream engineering exports.
Domestic steel industry pins high hopes on Modi government For steel industry, the higher investment allocation would lift up the subdued business sentiment which is acting against encouraging private corporate investment and raising the animal spirits in various critical sectors of the economy. Budget 2019 India: The Union Budget presentation of the new government is keenly awaited. Indian economy for the last two quarters has been facing challenges in terms of subdued manufacturing growth and job creation, liquidity problems, slow agricultural output and uncertainty in business scenario culminating in lower GDP growth (fourth quarter GDP of 5.8% and 7% for FY19). It is therefore much expected that a few economic stimulus measures would be announced in the Budget to bring the economy back on track. First, the budgetary allocations in infrastructure sectors like roads, railways, airports, irrigation, among others. Ports, urban and rural infrastructure, construction of residential and office complexes, water supply and sanitation, power projects, among others, are to be enhanced significantly to arrest the declining FAI in GDP in India. This alone would generate significant rise in demand for commodities (steel, cement and others) in the coming months and would result in other associated benefits originated from the multiplier impact to generate more income and employment.
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CEMENT
Rise in India’s cement prices falters Cement price rises in India, which started in India, have started to reverse, according to LiveMint. In June average prices fell to INR361 (US$5.17)/50kg bag, down by INR7, according to Kotak Institutional Equities Ltd. Price reductions were mainly led by southern and western Indian companies, which reduced prices by INR8-11/bag MoM. The fall in prices can be attributed to a drop in demand in June. While in April volumes increased one per cent YoY to 28.7Mt, throughout the April-June quarter consumption remained sluggish as labour shortages and a slowdown in government projects ahead of elections impacted demand. Going forward no change is expected as poor demand and seasonality is forecast to keep prices under pressure. However, profit margins are predicted to improve as input costs ease. Prices of imported petcoke remain between US$95-100/t, while domestic petcoke prices have fallen 13 per cent to INR7600/t QoQ in April-June 2019. In addition, following restocking at power plants and a 21 per cent drop in international thermal coal prices, domestic thermal coal availability improved. As diesel prices remain flat and higher-axle load norms yield benefits, freight costs are also expected to remain stable in the Apr-June quarter.
mand is expected to remain healthy over the next 3 years. “Given the sharp pricing recovery since February 2019, we believe cement companies are likely to report super operating performance in the current quarter. Considering the kind of realisation growth recently, a moderate decline in prices due to monsoon season might not impact pricing meaningfully,� said an analysis done by Reliance Securities. According to Motilal Oswal, across India, cement players hiked prices by Rs 20 per bag in April, followed by another hike of Rs 30 per bag in May, which was partly rolled back towards end of May. PanIndia, current prices are Rs 25 per bag higher than the average prices witnessed in 4QFY19. Prices have increased (as against 4QFY19 average prices) by Rs 40 per bag in the north, Rs 6 per bag in the south, Rs 37 per bag in central India, Rs 23 per bag in the east and by Rs 26 per bag in the west. Further, we have observed that the price hikes are more prominent in markets (the north and central India) that have seen substantial consolidation in the last few years.
Cement production increases carbon footprint; firms look for greener alternative The most astonishing thing about cement is how much air pollution it produces.
Cement players on verge of growth; price hike to sustain
Manufacturing the stone-like building material is responsible for 7 per cent of global carbon dioxide emissions, more than what comes from all the trucks in the world. And with that in mind, its surprising that leading cement makers from LafargeHolcim in Switzerland to Votorantim Cimentos SA in Brazil are finding customers to embrace a greener alternative.
After years of consolidation, the cement industry is in for strong growth. It is expected that an incremental demand will be higher than an incremental supply over next three years and the companies are unlikely to cut prices any further and would rather be able to sustain the recent prices that took place in the last few months, feel analysts.
Their story highlights the difficulties of taking greenhouse gases out of buildings, roads and bridges. After wresting deep cuts from the energy industry, policymakers looking to extend the fight against global warming are increasingly focusing on construction materials and practices as a place to make further reductions. The companies are working on solutions, but buyers are reluctant to pay more.
With strong improvement in demand scenario leading to demand growth of 7% in FY18 and sustained demand growth in FY19 at 10%, we expect demand to moderate with 6% growth in FY20E despite all tailwinds in place to boost cement requirement. The de-
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There is so far too little demand for sustainable materials, said Jens Diebold, head of sustainability at Lafarge Holcim. I would love to see more demand from customers for it. There is limited sensitivity for carbon emissions in the construction of a building.
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GLOBAL Indonesia regulatory changes to bring more uncertainty to coal sector
is not a short-term investment,” said Hendra Sinadia, executive director of the Indonesia Coal Mining Association, on the sidelines of Coaltrans on the Indonesian island of Bali.
Indonesian coal miners said upcoming regulatory changes are putting added pressure on their businesses amid depressed prices and rising competition from other energy sources.
Among the changes the miners are worried about are the rules on how much area a miner can operate under the new permit system, Sinadia said.
The Indonesian government is in the process of amending coal mining rules to enforce implementation of a 2009 mineral law that require miners to convert their mining permits to a licensing system upon the expiration of their current contracts. The issue was one of the most talked about by local miners at the Coaltrans industry conference in Bali this week. The coming change has already affected investment sentiment, an Indonesian coal miners group said, and there are fears the reluctance to invest could spread to related sectors such as power generation, even amid a push to add 35 giga watts to the country’s power capacity and boost infrastructure investment to prop up sluggish domestic spending. “This is a big concern for us, because coal investment
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Indonesian physical coal prices hold steady Indonesian physical coal prices were steady as the market made a typically slow start to the week, as a significant number of market participants mull the future of the markets at the Coaltrans Asia conference in Bali this week. Details of deals were slow to emerge, with bids for July-loading geared supramax GAR 4,200 kcal/kg cargoes largely unchanged at around $35/t compared with around $34.50-35.50/t for much of last week. Most offers were also unchanged from late last week at around $36.50-37/t. The bid and offer levels seen are in line with deals for this type of coal last week, when several geared supramax cargoes of GAR 4,200 kcal/kg coal traded
in a $35.15-36.50/t range. Argus last assessed prices of this coal on 21 June at $35.96/t, up by 30¢/t from the previous week following weather-related supply disruptions out of Kalimantan earlier in the month. Trading activity in the ICI 4 derivatives market was also muted after a total of 30,000t of mostly July contracts cleared on the CME last week at higher prices than the previous week. Bids for both June and July contracts were lower, although offers for both months increased compared with last week.
The country’s daily average output of raw coal stood at 10.08 million tonnes last month, NBS data showed. Imports of raw coal jumped 23 percent year on year to 27.47 million tonnes in May, while during the January-May period the imports totaled 127.39 million tonnes, a 5.6-per cent increase from a year ago. Meanwhile, the price of coal slightly dropped, with the transaction price of Qinhuangdao 5,500 Kcal/kg thermal coal falling to 588 yuan (about 85.3 U.S dollars) per tonne.
China’s benchmark power coal South Africa’s Exxaro says Esprice remains flat kom woes to hit coal production China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of coal prices in northern China’s major ports, stood at 577 yuan (about 84 U.S. dollars) per tonne, according to Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. Although thermal power generation and the demand for thermal coal increased, hydropower output has been affected as hydropower stations need to focus on the flood discharge function since the arrival of the rainy season in eastern and southern China, analysts said. They attributed the flat trend of the index to the decline in the stock of coal in ports in north China, a slowdown of imported coal as China’s customs strengthened supervision over coal imports and a jump of power coal forward contracts which resulted in the ease of market pessimism. Released by the Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. every, the BSPI is a leading indicator of China’s coal prices.
China’s raw coal production up 3.5 pc in May China’s raw coal production rose 3.5 per cent year on year to 310 million tonnes in May, according to the National Bureau of Statistics (NBS). In the first five months, the country’s raw coal output came in at 1.42 billion tonnes, up 0.9 per cent from a year ago, according to the bureau.
South African miner Exxaro Resources expects its coal production to fall by 5% by volume in the first half of 2019, mainly due to reduced demand from struggling state-owned power utility Eskom, it said. It added it expects domestic coal demand and pricing to remain stable for the remainder of the year, but does not see a recovery from the international price/ demand situation. Slowing economic growth in China is weighing on demand expectations for thermal coal in the world’s biggest market for the fuel, while global moves towards cleaner energy are compounding problems arising from a glut in supply. The supply-demand tandem is likely to keep prices for coal used in power plants under pressure in coming months. Exxaro Finance Director Riaan Koppeschaar said in a statement a contractual agreement with Eskom would help mitigate the reduced volumes at home. “China will continue to influence the supply/demand balance in the Pacific with related potential price volatility,” he added. Coal capital expenditure (capex) in 2019 is expected to be 9% lower than guided in March, primarily because of delays with the Grootegeluk 6 plant expansion project. Delays in finalising approvals for Thabametsi coalfired power plant and lenders withdrawing their funding to old coal technology coal-fired power stations
CCAI Monthly Newsletter June 2019
| 17
also contributed to the lower capex spend forecast.
Coal price collapsing, renewables losing fight in Queensland In Australian dollar terms, the Newcastle coal price was around A$160 a tonne in December, 2018, and it’s now around $100/t, and the decline has accelerated in the past month. Around the turn of the year the chatter put the blame on declining demand in Europe, but by and large for Australia the vast majority of thermal coal goes to Asia – Japan and China being two of the largest customers. We have long said that China cannot afford to keep paying over US$100/t for thermal coal, because it’s a big negative for its energy intensive, globally dominant, manufacturing sector such as steel, cement, chemicals and all the stuff that needs raw materials from Australia. May data for electricity and coal production in China is not yet available, but it’s unlikely that a fall in either Chinese or Indian demand is responsible for the latest price fall. The most likely explanation is an increase in supply, particularly of low quality Indonesian coal but also US coal seeking a non European home, South African coal and indeed increased exports from Australia. The decline should put some modest downward pressure on electricity prices in Australian main grid (the NEM) but it’s really thinking about whether the price is yet low enough for generators to want to write longer term contracts, ie for 2022-2028. In US$ terms prices are now about 10% below 5 year average but right on the average in A$ terms.
Coal price slump in Asia even as demand grows shows supply is the issue: Russell Whenever coal prices decline it’s tempting for those opposed to the polluting fuel to think that demand is falling amid a move to cleaner renewable energies, but in the current cycle it appears oversupply is the main culprit. Coal prices in Asia, especially the benchmark thermal
18 | CCAI Monthly Newsletter June 2019
grade at Australia’s Newcastle Port, have come under pressure in recent weeks, even as coal exports have actually been rising. The weekly Newcastle price, as assessed by commodity price reporting agency Argus, dropped to $72.01 a tonne in the week to June 9, the weakest in two years and down 40% from its seven-year peak of $119.74 in July last year. Lower-quality Indonesian thermal coal with an energy value of 4,200 kilocalories per kilogram, as assessed by Argus, has fared somewhat better than Newcastle supplies, but it has also struggled in recent weeks. Indonesian coal dropped to $36.66 a tonne in the week to June 7, down from this year’s high of $40.32 in March and some 28% below the 6-1/4-year peak of $51.04 hit in February 2018. These price declines have come even as the main seaborne exporters of coal to Asia, the world’s major demand region, have all increased shipments.
IN PARLIAMENT GOVT. OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 699. Coal Production 26.06.2019 SHRI SU. THRUNAVUKKARASAR: Will the Minister of COAL be pleased to state: a) the details of the targets fixed and total production of coal by the subsidiaries of Coal India Ltd. such as Northern Coalfields Ltd. and Bharat Coking Coal Ltd. during each of the last three years; b) the total income earned by the Coal India Ltd. and its subsidiaries during the said period; and
20 | CCAI Monthly Newsletter June 2019
c) the total funds allocated by the Union Government for the development of various subsidiaries of Coal India Ltd. during the said period? Answer MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) Coal production targets and achievements of Coal India Ltd. and its subsidiaries during the last three years is given below: ( in Million tonnes)
2016-17
Subsidiary
2017-18
2018-19
Target
Actual
Target
Actual
Target
Actual
ECL
46.94
40.52
47.00
43.57
46.76
50.16
BCCL
37.00
37.04
40.50
32.61
38.00
31.04
CCL
67.00
67.05
70.50
63.41
68.70
68.72
NCL
82.00
84.10
89.00
93.02
95.09
101.50
WCL
48.00
45.63
48.50
46.22
49.70
53.18
SECL
149.67
140.00
153.80
144.71
159.50
157.35
MCL
167.00
139.21
150.00
143.06
151.50
144.15
NEC
1.00
0.60
0.70
0.78
0.75
0.78
Total CIL
598.61
554.14
600.00
567.37
610.00
606.89
(b): Total income which includes Revenue from operations (net of statutory levies except excise duty) and other income as presented in annual accounts earned by the Coal India Ltd. and its subsidiaries (consolidated) during the said period is as under:Total Income ( in Crore) Year
2016-17
2017-18
2018-19
ECL
10928.31
11468.67
13904.33
BCCL
9172.13
8026.66
10235.92
CCL
12068.73
12050.11
12494.72
NCL
11970.36
13384.42
16237.20
WCL
7783.99
8875.01
11186.72
SECL
20149.94
21043.98
21855.00
MCL
16465.99
16014.52
18580.78
CMPDIL
945.99
1168.86
1287.51
CIL
15315.93
10226.85
11482.96
Sub Total
104801.37
102259.08
117265.14
Adjustment
-15478.43
-10633.83
-11844.52
TOTAL
89322.94
91625.25
105420.62
(c):Expenditure of CIL and its subsidiaries is full managed by its own internal resources. CCAI Monthly Newsletter June 2019
| 21
Q. No. 828. coal reserves 26.06.2019 SHRI KAUSHALENDRA KUMAR: Will the MINISTER OF COAL be pleased to state: a) whether there are abundant coal reserves in the country; b) if so, the details thereof and the assessment made in this regard; c) the reasons for the country not being selfsufficient in the production of coal even now; and D) the details of coal imported every year and the amount being spent for this purpose? ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)
(a & b): The total estimated coal resources in the country is 319.02 billion tonnes as per “The inventory of Geological Resources of Indian Coal� (as on 01.04.2018), prepared by the Geological Survey of India. Every year about 3 to 5 billion tonnes of proved (measured) resources are being added through fresh exploration to the Coal Inventory of India. If present rate of extraction prevails in India, coal will last for several decades. (c): Despite the efforts made by coal sector, the country is not self sufficient because there is limited availability of coking coal in the country, which is essential input for steel making. Further, power plants designed on low ash imported coal will also continue to import coal for their requirements. (d): The amount of coal imported in Million Tonnes by India during the last three financial years is as follows:
Year
Imported Coal (Million Tonnes)
Value (in Rs. Crore)
2016-17
190.953
100231.394
2017-18
208.272
138476.977
2018-19
235.240
170880.738
Q. No. 786. Shortage of Coal 26.06.2019 SHRIMATI RAMYA HARIDAS: Will the Minister of COAL be pleased to state: a) whether there is acute shortage of coal in the country; b) if so, the details thereof and the efforts being made to increase coal production in the country by opening new mines;
22 | CCAI Monthly Newsletter June 2019
c) the time by which the demand- supply mismatch of coal would be over; d) whether the Ministry is giving priority to supplying of coal to thermal power stations in view of their critical requirements; and e) if so, the details thereof?
ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a): The all India raw coal production has increased from 565.77 Million Tonnes (MT) in 2013-14 to 730.35 MT (Provisional) in 2018-19. This is absolute increase of 164.58 MT in coal production in this period as compared to the increase of 73.01 MT between 2008-09 and
2013-14. As on 19.06.2019, the vendible coal stock with Coal India Limited (CIL) was 39.36 MT. (b). The opening of coal mines is a continuous activity which is undertaken regularly to meet the increasing demand of coal in the economy. CIL and its subsidiaries have planned upcoming greenfield projects as under:
Sl.
Subsidiary
STATE
COAL FIELD
PROJECT
TYPE
PR CAPACITY (MTY)
1
ECL
JHARKHAND
RAJMAHAL
HURA C OCP
OC
3
2
SECL
CHHATTISGARH
CIC
KETKI
UG
0.42
3
SECL
CHHATTISGARH
CIC
JAGANNATHPUR
OC
3
4
SECL
CHHATTISGARH
CIC
MADAN NAGAR
OC
12
5
SECL
CHHATTISGARH
SENDURGARH
VIJAY WEST
OC
3
6
SECL
CIC
AMRITDHARA OC
OC
2
7
SECL
CIC
MALACHUA
OC
3
8
SECL
CHHATTISGARH
KRB
SARAIPALI
OC
1.4
9
SECL
CHHATTISGARH
KRB
KARTALI EAST
OC
2.5
10
SECL
CHHATTISGARH
RAI
PELMA
OC
15
11
SECL
CHHATTISGARH
RAI
BIJARI
OC
1.5
12
SECL
CHHATTISGARH
RAI
DURGAPUR OC
OC
6
13
SECL
CIC
BATURA
OC
2
14
MCL
ORISSA
IB VALLEY
GARJANBAHAL OCP
OC
15
MCL
ORISSA
IB VALLEY
SIARMAL OCP
OC
MADHYA PRADESH MADHYA PRADESH
MADHYA PRADESH
TOTAL
10 40 104.82
Also, so far 84 coal mines stand allocated (originally 92 coal mines were allocated, later on, coal Mine Development & Production Agreement / Allotment Agreement were terminated in respect of 8 coal mines) under Coal Mines (Special Provisions) Act, 2015. Further, directions have been issued to the Nominated Authority for allocation of 26 more coal mines. (c) to (e): There is a gap between demand and domestic supply of coal as there is limited availability of indigenous coking coal and there are power plant that are designed on imported coal which continue to import coal for power generation. For 2019-20, Ministry of Power has projected annual domestic coal requirement of 530 MT from CIL, 54 MT from Singareni Collieries Company Limited and 50 MT from Captive mines. Due to enhanced domestic coal supply to power plants, coal import by power plants has reduced from 80.71 MT in 2015-16 to 61.66 MT in 2018-19. CCAI Monthly Newsletter June 2019
| 23
RAJYA SABHA Q. No. 18. Import and production of coal 24.06.2019 SHRI SUKHENDU SEKHAR RAY: Will the MINISTER OF COAL be pleased to state: a) the amount of coal reserves India has at present; b) the amount of coal produced, in tons by Coal India Limited during last three financial years; c) the amount of coal imported, in tons by India during the last three financial years; d) the amount of imported coal that was of non-coking and/or thermal coal variety; and e) details of specific measures adopted by Coal India Limited to increase coal production? ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) to (e): A statement is laid on the table of the house. 3rd Position Statement refers to reply part (a) to (e) in respect of Rajya Sabha question no *18 for reply on 24.06.2019 asked by SHRI SUKHENDU SEKHAR RAY regarding Import and production of coal: (a): The total estimated coal resources in the country is 319.02 billion tonnes as per “The inventory of Geological Resources of Indian Coal� (as on 01.04.2018), prepared by the Geological Survey of India. (b): Raw coal production in tonnes of Coal India Limited (CIL) during last three financial years is given below:
24 | CCAI Monthly Newsletter June 2019
Year
Production (Tonne)
2018-19
606890000
2017-18
567370000
2016-17
554140000
Total
1728400000
(c ): The amount of coal imported in tonnes by India during the last three financial years is as follows: Year
Supply of Imported Coal (Tonnes)
2016-17
190950000
2017-18
208270000
2018-19
235240000
Total
634460000
(d): The amount of coal imported in tonnes by India of non-coking and/or thermal coal variety during the last three financial years is as follows: Year
Non Coking and/or Thermal coal (Tonne)
2016-17
149310000
2017-18
161270000
2018-19
183400000
Total
493980000
(e): In order to enhance coal production, CIL has taken the following steps: Focus on high capacity mega mines (Capacities more than 10 million tonne per annum) with high mechanization. Portal based monitoring of on-going projects to ensure timely completion of projects.
Introduction of state of the art technology to improve its work efficiency with high capacity Heavy Earth Moving Machinary (HEMM) like 42 cum Shovel and 240 T Rear Dumpers in Gevra Expansion, Dipka & Kusmunda open cast mines. Introduction of Surface Miners in opencast mines to improve operational efficiency & to cater to environmental needs. During 2018-19 in CIL, around 50% of the opencast coal production was through Surface miners. Introduction of IT enabled Operator Independent Truck Dispatch System (OITDS) in 11 nos. of mines of CIL. Introduction of Mass Production Technology in underground coal mines, 2 Mines are worked with powered support Longwall technology and 9 mines are worked with Continuous Miner technology. For rapid coal evacuation, 19 nos. Coal Handling Plants with silos and rapid loading system having existing capacity of 152.5 million tonne are in operation. Q. No. 137. Action plan for increase in production of Coal 24.06.2019 MS. SAROJ PANDEY: Will the Minister of COAL be pleased to state: (a) whether Government would formulate any action plan to increase the production and consumption of coal in the country and if so, the details thereof? Answer MINISTER OFPARLIAMENTARY AFFAIRS, COAL ANDMINES (SHRI PRALHAD JOSHI) (a): There has been a consistent effort to increase domestic coal production. The all India raw coal production has increased from 565.77 MT in 2013-14 to MT (Prov.) in 2018-19. Absolute increase in all India coal production from
2013-14 to 2018-19 is 164.58 MT as compared to an increase of coal production of 73.01 MT between 2008-09and 2013-14. Further, in the current year 2019-20 (April-May 2019), all India coal production was 113.24 MT with a growth rate of 2.4%. Coal is consumed by the sectors using coal as intermediary and the Government has no role in increasing the consumption of coal. In order to augment supply, a total of 84 coal blocks has been allotted under CM(Special Provision Act, 2015) so far. Further, the focus of the Government is on increasing the domestic production of coal which includes pursuing with State Government for assistance in land acquisition and coordinated efforts with Railways for movement of coal. In addition Coal India Ltd.(CIL) has taken the following steps to increase domestic coal production: CIL and its subsidiaries are going for higher capacity mega mines (Capacities > 10 MTY) with high mechanization. CIL has already introduced state of the art technology to improve its work efficiency. High capacity HEMMs like 42 cum Shovel with 240 T Rear Dumper have been introduced for this purpose. Surface Miners have been introduced in opencast mines in a big way to improve operational efficiency & to cater environmental needs by Coal India Ltd.(CIL). During 18-19, in CIL, around 50% of the opencast coal production was through Surface miners and is likely to further increase in subsequent years. Q. No. 134. Shortage of domestic supply of coal 24.06.2019 SHRI DEREK O’BRIEN: Will the Minister of Coal be pleased to state: CCAI Monthly Newsletter June 2019
| 25
a) whether it is a fact that domestic supply of coal is suffering from a shortfall, and if so, the details thereof; b) the details of the impact on the power sector of the country due to domestic coal supply being lesser than the demand; c) whether Government intends to encourage imports to cover the shortfall in domestic supply of coal and if so, the details thereof; and the steps taken by Government to increase domestic supply of coal? ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) & (b): The domestic coal supply has increased from 572.06 Million Tonnes (MT) in the year 2013-14 to 734.23 MT (provisional) in 2018-19. The supplies of domestic coal from Coal India Limited (CIL) has increased from 471.58 MT in 2013-14 to 608.14 MT (provisional) in 2018-19. In 2018-19, CIL supplied 491.25 MT (provisional) and SCCL supplied 55.3 MT (provisional) coal to Power sector. The augmentation of coal dispatch to Power sector has led to growth in coal based power generation by about 4% over the last year and also increase in the coal stock at Power plants end to the level of 30.95 MT, equivalent to 18 days consumption as on 31.03.2019. (c): The coal import by power plants has reduced from 80.56 MT in 2015-16 to 61.55 MT in 2018-19. Coal and coke are under Open General License as per import policy of the Government and are imported by traders and consuming industries as per their requirement. As there is limited domestic availability of Coking coal and the power plants which are designed to consume imported coal continue to import coal for power generation, there is gap between overall demand and domestic supply of coal. (d): The progress of production and offtake of CIL is reviewed on a regular basis. Coal supplies to Power sector is monitored regularly
26 | CCAI Monthly Newsletter June 2019
by an Inter- Ministerial Sub Group comprising representatives of Ministries of Power, Coal, Railways, Shipping, Central Electricity Authority, NITI Aayog, CIL etc. Q. No. 136. Coal supply rationalisation scheme 24.06.2019 SHRI MD. NADIMUL HAQUE: Will the Minister of Coal be pleased to state: a) whether coal supply rationalisation scheme has been extended to private power producers; b) if so, the details thereof as well as the reasons therefor; c) the impact of the scheme on the consumers; and d) the total savings accrued because of the scheme so far? ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) & (b): Yes Sir. Ministry of Coal has issued the Policy for Linkage Rationalization for Independent Power Producers (IPPs) on 15.05.2018. The policy envisages to undertake a comprehensive review of existing sources of coal and consider the feasibility for rationalization of sources with a view to optimize the transportation cost and materialization taking into account coal availability and logistics. (c) & (d): As per request received from consumers, linkage rationalization of eligible IPPs has been done at Coal India Limited (CIL) for a total rationalized quantity of 2 Million Tonnes. The annual potential savings estimated by Central Electricity Authority for the above rationalization would be about Rs. 118 crore.
With Best Compliments From:
Sharda Ma
( )
COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA
UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com
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
State-run Coal India has decided to offer 21.5% additional coal this fiscal to power generators through forward e-auctions, while it will reduce offerings in the spot auction market from 201819 level by almost 4%. A senior executive at the coal behemoth said the company will offer 33 million tonnes of coal through forward e-auctions in 2019-20 compared with 27.14 million tonnes in 2018-19. About the same quantity will be offered through the spot auctions market during the year compared with 34.34 million tonnes in 2018-19. India imported 235.2 million tonne (MT) of coal in 2018-19 valued at Rs 1.7 lakh crore, Parliament was informed. During 2017-18, the country imported 208.2 MT of the dry fuel valued at Rs 1.3 lakh crore, Coal Minister Prahlad Joshi said in a written reply to Lok Sabha. In 2016-17, the minister said, India imported 190.9 MT of coal valued at Rs 1 lakh crore, the minister said. Joshi further said “despite the efforts made by coal sector, the country is not self sufficient because there is limited availability of coking coal in the country, which is an essential input for steel making.”
power Spot electricity prices have fallen to Re 1 per unit after a gap of nearly two years because of higher supply from renewable energy sources as well as conventional plants as they have adequate fuel stocks. Analysts say prices will remain low, which is likely to reduce electricity bills for some consumers. The key challenges before the new government in the power sector include ensuring uninterrupted supply across the country and improving the financial health of the state-owned electricity distribution companies (discoms). The Ujwal Discom Assurance Yojana (UDAY) for revival of discoms has not met the targets — cumulative financial losses of discoms grew 44% to Rs 21,658 crore at the end of FY19, reversing the declining trend since the scheme was launched in November 2015.
28 | CCAI Monthly Newsletter June 2019
*Thermal plants with a capacity of 37,700 MW are left with coal stocks enough to generate power for barely 1-5 days because of higher demand for electricity. These power stations are not being regarded as plants with “critical” stocks because Coal India has supplied almost their full quota. There are a few plants which have received more than their contracted quantity for the period.
CEMENT
Cement price rises in India, which started in India, have started to reverse, according to Live Mint. In June average prices fell to INR361 (US$5.17)/50kg bag, down by INR7, according to Kotak Institutional Equities Ltd. Price reductions were mainly led by southern and western Indian companies, which reduced prices by INR8-11/bag MoM. The fall in prices can be attributed to a drop in demand in June. While in April volumes increased one per cent YoY to 28.7Mt, throughout the April-June quarter consumption remained sluggish as labour shortages and a slowdown in government projects ahead of elections impacted demand. Cement demand to witness single-digit growth in FY20. Owing to slower pace of project execution, the demand for cement has been tepid in the first quarter of the current fiscal, the rating agency ICRA said. The agency, however, expects the demand to pick up from the third quarter of the fiscal, post-monsoon season and expects it to increase by nearly seven percent during for FY2020. In April this year, cement production stood at 28.7 million MT, which is lower by 13.3 % as compared to March 2019.
steel India’s steel consumption is expected to grow by 5%-6% this year, on the back of government’s expenditure towards infrastructure and construction. With NDA being voted back to power, the focus will continue to remain on infrastructure development, CARE Ratings said in its latest Outlook for the Steel Sector in FY20. The government will take more steps to contain imports of defective or sub-standard steel with a view to helping domestic manufacturers, an official said. The official said that local players prefer imports of defective or sub-standard steel as it is cheaper. According to industry experts, sub-standard steel impacts the quality of goods and hurt domestic manufacturers. The issue was discussed during a high-level meeting of steel and commerce ministries.
CCAI Monthly Newsletter June 2019
| 29
MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL
(kcal/kg)
Monthly Price - FOB
Monthly Price - FOB
Monthly Change (USD)
South Africa
6000 NAR
USD 62.26
INR 4324
-3.81
South Africa
5500 NAR
USD 50.42
INR 3501
-5.61
Australia
5500 NAR
USD 53.24
INR 3697
-7.86
Indonesia
5000 GAR
USD 49.80
INR 3458
-2.83
Indonesia
4200 GAR
USD 35.70
INR 2479
-2.93
USA
6900 NAR
USD 53.70
INR 3729
- 4.57
PET COKE
Sulphur
Price
India-RIL(Ex-Ref.)
-5%
INR 7600
Saudi Arabia (CIF)
+ 8.5%
INR 5885 ($85)
USA (CIF)
- 6.5%
INR 6093 ($88)
Exchange Rate
Change (Monthly)
USD/INR 69.440
-0.37
Coking Coal Price: Premium Low Vol
HCC 64 MID Vol
Semi Soft
Low Vol PCI
Mid Tier PCI
MET COKE 62% CSR
FOB Aus
CFR China
FOB Aus
CFR China
FOB Aus
FOB Aus
FOB Aus
CFR India
FOB N China
196.88
202.66
179.31
191.00
90.09
121.49
119.12
321.63
307.13
South Africa: * The South African export market, which had previously been one of the few bright spots in the global seaborne market, saw sharp day-onday declines. Discounts for physical coal from the financial 6,000 kcal/kg NAR market were relatively flat, meaning the financial market was the main driver behind the steep drops.
30 | CCAI Monthly Newsletter June 2019
Australia: * Australia managed to grow its thermal coal exports by 2% in the year through April, despite customs delays forcing a sharp slowdown in volumes to China, analysts told. Australia shipped 66.4m tonnes of thermal coal in the first four months of the year, compared to 65.2m tonnes over the same period last year, said IHS Markit director of coal Scott Dendy. This was despite a 17% drop in exports to China that came in at just 14m tonnes.
Indonesia: * Indonesian physical coal prices were steady, although some buyers raised their bidding prices slightly for low-calorific value material amid further weather-related supply disruptions in parts of Kalimantan. Bids for July-loading geared Supramax GAR 4,200 kcal/kg cargoes were in a $35.50-36/t range, up from the $3435.50/t range in the market for much of last week. * Indonesian coal miners said upcoming regulatory changes are putting added pressure on their businesses amid depressed prices and rising competition from other energy sources. The Indonesian government is in the process of amending coal mining rules to enforce implementation of a 2009 mineral law that require miners to convert their mining permits to a licensing system upon the expiration of their current contracts. The issue was one of the most talked about by local miners at the Coaltrans industry conference in Bali this week.
USA: * The US Energy Information Administration forecast coal production to total 699.8 million st in 2019, down 7.2% from last year’s production of about 754 million st, the EIA’s Short-Term Energy Outlook reported. June’s forecast for 2019 output was flat from May’s forecast,
however the 2020 projection increased 1.2% from the previous month to almost 646 million st. This was the highest forecast for next year since the EIA projected output of about 664 million st in March.
Pet Coke: * Indian petcoke buyers pivoted away from procuring seaborne petcoke amid a widening bid-offer gap as they kept a close watch on the US high sulfur thermal coal as import substitutes, market sources said. US high sulfur thermal coal from the Illinois Basin has been competitive and getting attention in the Indian market, as it was preferred over US petcoke and Indonesian high sulfur coals, said an Indiabased trader. He pegged the delivered price of US ILB coal at around $70/mt CFR India.
Shipping: * US coking coal exports in April totalled 4.22mn t, a drop of 21pc year on year, driven down by slower shipments to Europe and the absence of exports to China, data from the US Census Bureau shows. Export volumes were also down by 15.2pc compared with March. Exports to western Europe reached 855,761t in April, down by 41.1pc on the year, with no shipments being made to Germany and the UK in April and a decrease in volumes exported to France and Italy. But an increase in shipments to the Netherlands by 26.7pc on the year to 618,871t helped support overall volumes shipped to Europe.
CCAI Monthly Newsletter June 2019
| 31
Overall Domestic Coal Scenario Coal Production (in MT) Company
May, 2019
May, 2018
% Growth
April - May, 2019
April - May, 2018
CIL
46.6
SCCL
5.9
% Growth
47.1
-1.1%
91.9
92.0
-0.1%
501
15.2%
11.4
9.6
18.4%
Overall Offtake (in MT) Company
May,2019
May, 2018
% Growth
April – May, 2019
April – May, 2018
CIL
52.1
52.8
-1.4%
104.4
103.8
0.6%
SCCL
5.8
5.8
-1.5%
11.3
11.6
-2.2%
% Growth
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
May, 2019
May, 2018
% Growth
April – May, 2019
April – May, 2018
% Growth
CIL
40.6
42.7
-4.9%
80.9
83.1
-2.6%
SCCL
4.7
4.8
-1.7%
9.4
9.6
-2.0%
Company
Coal Qty. Allocated May, 2019
Coal Qty. Allocated May, 2018
Increase over notified price
Coal Qty. Allocated
Coal Qty. Allocated April - May,2018
Increase over notified price
CIL
2.40
3.49
58%
5.35
6.88
74%
Coal Qty. Allocated May,2018
Increase over notified price
Coal Qty. Allocated April - May, 2019
Coal Qty. Allocated April - May, 2018
Increase over notified price
6.75
37%
5.77
14.17
82%
Coal Qty. Allocated April - May, 2018
Increase over notified price
Spot E-auction of Coal (in MT)
Special Forward E-auction for Power (in MT) Company CIL
Coal Qty. Allocated May, 2019 2.72
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated May,2019
Coal Qty. Allocated May, 2018
Increase over notified price
Coal Qty. Allocated April - May, 2019
CIL
-
0.92
-
1.20
Company
Coal Qty. Allocated May, 2019
Coal Qty. Allocated May, 2018
Increase Over notified price
Coal Qty. Allocated April - May, 2019
CIL
-
-
-
1.88
100%
Special Spot E-auction (in MT)
32 | CCAI Monthly Newsletter June 2019
Coal Qty. Allocated April - May, 2018 Over notified price
Increase Over notified price
CCAI Monthly Newsletter June 2019
| 33
45399.22
HYDRO
66.45
NUCLEAR
14
13
Source CEA
TOTAL
BHUTAN IMP
79.93
62.17
ACTUAL*
JUN-2019
PROGRAM
60.75
HYDRO
6218.00
136932.00
44720.00
278392.07 1330000.0
THERMAL
Category
TOTAL
0.00
6780.00
BHUTAN IMP
2
3
PROGRAM
348.30
14394.96
3901.81
94188.45
4
ACTUAL*
513.95
13339.15
3504.52
86665.24
5
71.79
59.39
15
ACTUAL SAME MONTH 2018-19
71.31
63.22
16
PROGRAM
74.09
62.83
17
ACTUAL*
67.52
62.32
18
ACTUAL SAME PERIOD 2018-19
APRIL 2019 - JUN 2019
PLANT LOAD FACTOR (%)
67.77 108.47
67.63
107.92
111.34
108.68
7
100.46
101.53
122.08
99.75
6
932.80
39548.80
10971.43
287690.89
9
ACTUAL*
345081.00 339143.92
1015.00
36700.00
10404.00
296962.00
8
PROGRAM
318985.03
849.32
31575.32
9998.04
276562.35
10
98.28
91.90
107.76
105.45
96.88
11
106.32
109.83
125.25
109.74
104.02
12
% OF % OF LAST PROGRAM YEAR (9/8) (9/10)
ACTUAL SAME PERIOD 2018-19
% OF LAST YEAR (4/5)
ACTUAL SAME MONTH 2018-19 % OF PROGRAM (4/3)
APRIL 2019 -JUN 2019
GENERATION (GWH)
PERIOD : June 2019
JUN-2019
AN OVERVIEW
112316.0 112833.52 104022.86
515.00
14178.00
3196.00
226212.85 1142130.00 94427.00
1
Monitored Target Capacity Apr 2019 to (MW) Mar 2020
NUCLEAR
THERMAL
Category
SUMMARY- ALL INDIA
ENERGY GENERATION REPORT
Note
34 | CCAI Monthly Newsletter June 2019
REGISTERED
36