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Domestic
Coal India retains production and offtake momentum in May
Despite COVID-19 restrictions in several states, Coal India maintained its output and despatch momentum in May, the second month of the current fiscal, an official said. The mining major is likely to report dry fuel production of around 41.7 million tonnes and offtake of nearly 55 million tonnes this month as against production of 41.43 million tonnes and sales of 40 million tonnes in the corresponding period last year, the official said. In April, coal production stood at 41.9 million tonnes compared to 40.4 million tonnes in the year-ago period, recording a growth of 3.7 per cent. Offtake stood at 54.1 million tonnes during the reporting month compared to 39.1 million tonnes in the corresponding period last year, registering a growth of 38.4 per cent. Coal India had recently said that the pandemic had impacted production on account of a large number of the companys employees across subsidiaries and contractors testing positive for coronavirus. The Kolkata-based company commenced FY22 with a pithead stock of nearly 99 million tonnes. However, electricity demand had risen in recent months and the contribution of thermal power had improved, boosting demand for coal.
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Coal India, EMIL and Adani coal project contribute to India’s rising coal production
2020 was a tumultuous year for everyone. The economy suffered greatly as industries grinded to a halt. However, certain sectors held up better than the rest and even showed stable performances. One such sector is the Indian coal mining. Coal India Ltd(CIL), the largest coal-producing company in the world, accounts for almost
82% of the total production with the rest contributed by the Vedanta, Emil, DilipBuildcon and Adani Coal Project. Coal production in India was 730.87 million tonnes in 2019-20 as compared to 728.72million tonnes in 2018-19, which shows a modest growth of 0.30%. Out of total, CIL produced 602.15 MT in 2019-20 despite the pandemic. It had previously recorded 606.89 MT. While most MDO companies have recently entered the coal industry, their coal projects have been churning out impressive figures. For example, EMIL produced an impressive 11.44 MnTe of coal just a year after it commenced operations. Similarly, Adani’s Parsa East & Kanta Basan coal block has a peak capacity of 15 MMTPA. One can certainly expect the Adani coal project to pump out huge numbers too.
Coal India carbon emissions less than 1 per cent of India's in FY20
State-owned Coal India Ltd has said that the PSU accounted for only 0.65 per cent of the country's total carbon dioxide (CO2) emissions of 2,616 million tonnes (MT) during FY2019-20. Coal India (CIL) said that this is according to the data sourced from Global Carbon Project: Carbon Di-Oxide Information Analysis Centre, of the US. A back-of-the-envelope calculation estimates 30 kg of CO2 emission for every tonne of coal produced. With CIL's opencast output at 572 MT, during FY20, a little over 17 MT of CO2 equivalent was emitted out of CIL's coal mining operations, compared to the country's total of 2,616 MT. Pollution arising out of coal mining operations is not much compared to burning of the fossil fuel, from where major emissions emanate.
CIL to continue with fuel supply to power plants under import substitution
of coal to the power plants under import substitution in the ongoing fiscal. The development assumes significance in the wake of the PSU earlier stating its drive for coal import substitution has gained tempo with consumers opting for about 90 million tonnes (MT) of indigenous coal in FY'21. "The issue of supply coal in the FY 2021-22 was deliberated during the sub-group meeting...chaired by Joint Secretary, Ministry of Coal, wherein it has been decided to continue the supply of coal to the power plants under import substitution mechanism for FY 2021-22," Coal India Ltd (CIL) said in a notice. CIL further said that the PSU and the Central Electricity Authority (CEA) have been directed to put notice asking to submit the requirement for 2021-22. "Power utilities desirous of procuring domestic coal in lieu of imported coal are hereby requested to submit their...requirements of coal for FY 2021-22," the notice said.
SCCL registers growth and supplies more coal than ever before
The Singareni Collieries Company achieved considerable growth in April this year in terms of coal production, dispatches and overburden removal in spite of disruptions due to the Covid pandemic. During April 2021, the state-owned mining company transported 54.43 lakh tonnes of coal, a growth of 79.11 per cent when compared to 30.4 lakh tonnes in April last year, and coal production was at 48.56 lakh tonnes, up 61.9 per cent over 30 lakh tonnes in April last year. Similarly, this April, it managed to achieve 347 lakh cubic metres of overburden removal compared to 272.2 lakh cubic metres in April last year, a growth of 27.5 per cent. As against sales of coal of Rs 1,201 crore last year in April, this year it achieved a sale of ₹1,693 crore, registering a growth of 41 per cent.
2nd Tranche of commercial coal mines auction gets tremendous response: Govt
The Centre said the second tranche of commercial coal mines' auction has received tremendous response which is reflected in around 50 mine specific tender documents being purchased by bidders till date. Moreover, many other prospective bidders are in the process of registration and purchase of tender documents from the auction portal, the coal ministry said in a statement. The bid submission date has been extended to enable interested parties travel to mine locations for inspection once the lockdown curbs are removed in states, it added. In March, India launched the second tranche of auction for commercial coal mining, offering 67 mines for sale. Coal Minister Pralhad Joshi launched the auction process in a programme held in New Delhi
Mining, construction equipment industry may grow by 15-20% in 2021: ICRA
ICRA has said the mining and construction equipment industry is likely to grow by 15-20 per cent the calendar year 2021 but stressed that the economy, in the grip of a pandemic, could throw up sudden negative surprises. The first quarter of 2021 is estimated to have reported a strong equipment demand growth of 45-50 per cent, ICRA said in a statement. "Following a 10-12 per cent contraction in CY2020, dragged down primarily by the 39 per cent decline in H1 CY2020, the mining and construction equipment (MCE) industry is poised to grow by 15-20 per cent in CY2021 (5-10% in FY2022)," it said. However, the economy in the grip of a pandemic could throw up sudden negative surprises, as witnessed in April 2021, when demand was relatively subdued. While overall equipment demand will be strong in 2021, partly due to the low base of 2020, volatility in demand is likely, with a strong first quarter, a relatively subdued second quarter in the grip of the second wave, and the emission related pre-buy pick-up and post-buy slump in the third and fourth quarter of 2021.
India's coal import is expected to be subdued in coming months on account of various factors like prevailing Covid situation, high coal stock in the system and higher international prices, according to mjunction. mjunction -- a joint venture between Tata Steel and SAIL -- is a B2B e-commerce company and also publishes research reports on coal and steel verticals. The country's coal import fell 12.62 per cent to 215.92 million tonnes (MT) in FY21 from 247.10 MT in FY20, according to a provisional compilation by mjunction services, based on monitoring of vessels' positions and data received from shipping companies. "The overall decline in coal imports during the year 2020-21 was on expected lines. In coming months, import demand is likely to be subdued in view of the surge in COVID-19 infections, high coal stock in the system and high prices prevailing in the international market," mjunction services MD and CEO VinayaVarma said. India's coal import in March 2021 was at 19.79 MT as against 19.87 MT imported in the same month a year ago, mjunction said. For the financial year 2020-21, total coal and coke imports stood at 215.92 MT, about 12.62 per cent lower than 247.10 MT imported during FY20.
RAILWAYS
Indian Railways induct 100th WAG 12000 HP locomotive
In a boost to the ‘Make-in-India’ initiative, Railways have inducted the 100th 12000 HP WAG locomotive manufactured by Madhepura Electric Locomotive (MELPL) at one of India’s largest integrated greenfield manufacturing facilities. These locomotives are state of the art IGBT based, 3 phase drive and 12000 horsepower electric locomotive which will help to decongest the saturated tracks by improving the average speed and loading capacity of freight trains. With twin Bo-Bo design having 22.5 tonnes) axle load and upgradable to 25 tonnes with a design speed of 120 kmph, these electric locomotives are playing a key role in revolutionizing the freight movement in the country. It will help to decongest the saturated tracks by allowing faster, safer and heavier freight trains to move across the country, as well as improve the loading capacity. “So far, these e-locos have traversed across all railway divisions and are performing well. We look forward to more such delivery milestones,” a railway statement said.
SHIPPING
Gain for shipping players as Baltic Dry index touches 10-year high
With the Baltic Dry Index having hit a 10-year high recently, Indian shipping companies are not just benefitting from the high freight but also from increased trade with Bangladesh and Vietnam, industry experts said. “Construction activity has picked up significantly in Bangladesh as the country is focusing on infrastructure growth. Due to this, Indian shipping companies are witnessing increased cargo volumes with a lot of bulk raw material getting shipped. This is going to be a long-term trend as infrastructure push is expected to continue,” Captain Rahul Bhargava, chief operating officer (COO) at Essar Shipping said. Shipping Corporation of India (SCI), Great Eastern Shipping, Tolani Shipping, and Essar Shipping are into bulk carriers along with other segment fleets in the domestic market. “All vessels on spot charter will earn more and most companies keep a combination of spot and contracted vessels. So, the benefit would vary depending upon the portfolio,” said Anil Devli, chief executive officer (CEO) at Indian National Shipowners’ Association.
STEEL
Govt ready for another cut in import duty on steel to tame prices
The government has proposed to slash import duties on steel items further bringing it to zero or near zero levels to provide relief to MSMEs, which have been hit hard by the high cost of raw materials amidst the raging pandemic. Top government sources said that a decision had been taken to review duties on steel products and reduce it or withdraw it completely on few items to help the user industry hit hard by rising price of the metal in the domestic market. Also, lower import duties would help maintain supply lines that have been affected with several domestic steel companies reducing steel production to divert medical grade oxygen for Covid-19 relief measures.
Industry body IPMA seeks govt intervention to regulate rising steel prices
Industry body Indian Pipe Manufacturers’ As-
sociation (IPMA) has sought government intervention to regulate the prices of steel, which are trading at an all-time high in India. In a letter to Union Steel Minister Dharmendra Pradhan, the body has also sought a temporary ban on its export, a move which will prevent steel players from diverting their produce to the international markets. “Pipe manufacturers and MSMEs are struggling for a long time due to increased prices and shortage of steel in the domestic market. We had approached your (Steel Minister) office, requesting your kind intervention for regulating prices and imposing a temporary ban on steel export,” the letter dated May 20, 2021 said.
CEMENT
Indian cement makers' price hikes to support margins: Fitch Ratings
The recent price increases by India's cement companies will counter the higher energy costs, Fitch Ratings said. Besides, the impact on their profitability from a resurgence of the coronavirus is likely to be limited, it said. Fitch expects cement demand to be less affected by the restrictions to curb the spread of Covid-19 this time around, while the larger cement companies' strong profitability in the financial year ended March 31, 2021 (FY21) should cushion their financial profiles against downside risks. "Key energy commodities, including petroleum coke, imported coal and diesel, which together account for more than 50 per cent of cement makers' costs rose sharply, particularly after Q3FY21," it said. However, the impact on cement companies' costs was less apparent in Q4FY21 as they switched to using lower priced imported coal and benefitted from lower-cost inventories and a lag in adjustments in freight costs. "The fresh curbs to contain the resurgence of coronavirus in India after March 2021 are more localised," the ratings agency said.
As costs head north, cement makers switch to cheaper fuel
Rising commodity prices are likely to hit the cement sector hard. The cost of imported petroleum coke (petcoke), a key input, has more than doubled to around $130 per tonne on a yearon-year basis. This steep surge is a result of higher sea freight and supply-side constraints. Add to this a 37% year-on-year increase in diesel prices, which translates into elevated freight costs. Power and fuel expenses account for 2530% of the sector’s total operating cost, so operating margins are under threat. To tackle this, cement companies are using more coal instead of petcoke. On a year-on-year basis, the price of thermal coal has risen by 82% to nearly $100 per tonne, but it remains a cheaper alternative. In the March quarter, the fuel mix of UltraTech Cement Ltd between petcoke and imported coal stood at 30% and 60%, respectively, compared to 77% and 10% last year. Also, the company has increased the share of green power from 11.5% last year to 12.3% in the financial year 2021. For peer Dalmia Bharat Ltd, petcoke accounted for 52% of its fuel mix in the March quarter of FY21 versus 70% in Q3FY21. The company expects the share of alternative fuels to increase from 8% in FY21 to 15% in FY22. Coal accounted for 40% of its fuel mix in FY21. Among regional companies, south-based Ramco Cement Ltd cut its petcoke usage from 48% in FY20 to 41% in FY21. Petcoke usage in Q4FY21 was just 23% versus 66% in the same quarter of the previous year, its management said.
