India is the world’s fifth-largest coal producer but also the steam coal market’s largest buyer – accounting for 19% of global imports (169 MMT) in 2015. Indonesia, South Africa and Australia top the list of India’s thermal coal suppliers. With India’s government committed to the country’s complete electrification, the coal fleet will continue to grow strongly. IHS Markit predicts India will spearhead future Asian demand for steam coal with imports reaching 181 MMT by 2020 and steadily increasing through 2040. In addition, India imports a substantial amount of metallurgical coal from Australia and coking coal from China.
While India has ample domestic thermal coal supplies and its government has expressed a desire to end imports, continued reliance on thermal coal imports appears inevitable for the foreseeable future. First, the country’s planned shift to supercritical and ultra-supercritical power plants after 2017 favors continued dependency on high-quality coal imports needed to run those plants. Indian coal, which has high ash content and low calorific value, presents a challenge for efficient functioning of supercritical boilers. Second, India’s infrastructure for transporting coal from inland deposits to its two dozen coastal power stations remains poor. The share of India’s coastal-based power, which operates completely on imported coal, is expected to increase from the current 17% to 23% by 2030. Finally, state support of domestic coal production has historically been weak, and recent reforms have promoted port-to-rail connectivity, effectively paving the way for increased coal imports.
In the meantime, coal is likely to remain the mainstay of India’s power generation. Coal currently represents 60% of the country’s total power installed capacity, and some 77 GW of coal-based power projects are under construction and slated to come online between now and 2020.
You can find the latest Indian coal market data, news and insight through the IHS Indian Coal Report. Available through our APAC and African Coal Market News & Analysis service, the report provides: