The collapse of a major Baltimore bridge on March 26 is unlikely to impact coal prices for India, according to industry experts.
India is currently bracing for summers when the country's peak power demand is expected to hit record breaking levels. At least 70 percent of India's power demand is met through coal-fired thermal power plants, making coal an important resource for the country. Even as India currently has sufficient domestic coal stocks (46.6 million tons as on March 26) at thermal power plants, certain amount of imported thermal coal is needed to fulfill a blending mandate issued by the Ministry of Power. Besides, there are 15 private thermal power plants that run only on imported coal.
The collapse of the Francis Scott Key Bridge in Baltimore, United States is likely to shut down the port’s coal exports for as many as six weeks and block the transport of up to 2.5 million tons of coal, according to Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC.
Thrasher told Bloomberg that the Baltimore port ships less than 2 percent of global seaborne coal so the bridge collapse will have little effect on global prices. He added that the coal that moves out of Baltimore includes a lot of India-bound thermal coal, which is used for electricity generation.
But officials in India's Ministry of Coal said the country will not be impacted much. "India primarily imports thermal coal from South Africa and Indonesia, and average prices from these countries decreased by approximately 54 percent and 38 percent respectively during April 2023 to January 2024, compared to the corresponding period in the previous year. So, we have seen an uptick of about 94.21 percent in coal imports by imported coal-based power plants during April 2023 to January 2024, compared to the year-ago period. But, it is mostly from the countries mentioned above," said the official.
An analyst from S&P Global Commodity Insights said the bridge collapse incident is unlikely to raise coal prices. "I don't believe that it will necessarily raise coal prices. It may provide a small bump for a short period to Colombian coal prices. My initial reaction is that 2.5 to 4 million mt of coal may be delayed until the waterway can be cleared. Over a longer period, if the water way is cleared in a week to two weeks, it will be less of an impact," the analyst was quoted in an S&P Global report.
India’s annual coal demand totals more than 1 billion tons and the nation imported roughly 238 million tons of the fuel in the most recent fiscal year, of which about 6 percent was shipped from the US. Baltimore accounted for around 12 million tons of the imports, according to Bloomberg.
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