Reuters quoted Indian traders as saying that Indian imports of South African coal are likely to grow to 9 million to 10 million in 2009 from 8 million tonne in 2008 due to strong demand and lower coal prices.
Mr Kaamill Fareed senior manager of Indian importer Coal and Oil on the sidelines of the McCloskeys Coal Conference in Cape Town said that demand for South African coal has revived significantly now that prices have fallen to around USD 70.00 a tonne FOB Richards Bay from a high of USD 140.00 in September.
Mr Fareed said that "There is very strong demand from all sectors, cement, power and sponge iron. Even though profit margins have fallen for these sectors, at these prices South African coal is very affordable."
However, India has become a key market for South African coal in the past 3 years. Prior to 2006, almost all South Africa's 65 million tonne a year of steam coal exports were shipped to Europe, still the biggest importer.
As South Africa's export capacity grows to a projected 91 million tonne a year with the Richards Bay Phase V expansion, European demand is expected to stay flat and the bulk of the increased exports are projected to be absorbed by India.
As per report, India's imports of coal are set to rise sharply to over 50 million tonne in the next 2 years due to a rapid expansion of power generation and cement output. This booming coal need cannot be met by India's domestic coal production, forcing the country to import increasing quantities. India is likely to import at least 35 million tonne of coal in 2009, most of which will come from Indonesia. South African coal has been tried and tested by various Indian industries and is a preferred option by many buyers.
Other Indian and end users at the conference said that India would import more than 10 million tonne in 2009 if prices remain at around the same level of USD 70.00 a tonne to USD 80.00 a tonne FOB, but there are limited spot tonnages available.
Source : Reuters