WHILE India’s coal inventories have dropped to a three-year low, imports are probably set to rise, which is very supportive for bulker demand.

Torvald Klaveness expects a strong fourth quarter, given all-time high imports for the month of September, at 18m tonnes. Although the figure includes delayed cargoes from August, the trend is up, said Peter Lindstrom, head of research at the Norway-based group.

“If inventories continue to be at extremely low levels, then we expect imports to rise,” which is positive for capesize, panamax and supramax, he said.

India has been importing coal from the US, Mozambique and Indonesia.

Coal inventories at power plants in India stood at 7.6m tonnes as of October 4, Arrow Research said in a note, adding that the level was only enough to last six days at the current consumption rate. Stocks are down by 33% on month and 63% on year, it said, citing the Central Electricity Authority.

“With lagging domestic production and robust demand, India is likely to increase its coal imports in the coming weeks to make sure power plants have adequate coal supplies,” it added.

Clarksons said that strong growth in power demand “could continue to support expansion in coal imports in the long term”, particularly if domestic output missed targets.
The country’s plans to connect some 300m people to the grid and continued firm economic growth could support rising import needs even as domestic production rises, Clarksons said.

Demand has been outpacing domestic supplies of coal, not just for power generation, but also for steel production.

In the first eight months of this year, India’s steel output increased to 66.5m tonnes, up by 5.1% versus the same period in 2016, according to figures from the World Steel Association.

And it is not just India that is expected to boost coal imports.

Low stockpiles in China as it curtails its own production over pollution concerns will likely mean higher imports, according to Mr Lindstrom, who added that Japan, South Korea and Taiwan had all increased their inflows of late.