Though it is more cost-effective to charter larger vessels, Indian buyers prefer the smaller ones due to 2 reasons. One is that the ports in India can more easily accommodate the smaller vessels. Secondly, the vessels which bring coal to India from Indonesia, instead of returning empty, load iron ore in India and head for China from where they return empty to Indonesia. From India to China, the freight cost for iron ore is around $6 per ton, covering around 3,000 nautical miles. This strategy reduces the shipping companies’ costs by almost 25 percent, Rahul Sharan, Lead Research Analyst, Drewry Maritime Research, tells Madhumita Mookerji.
What is the current scenario like with regard to the seaborne coal market?
Out of the total logistics costs, seaborne shipping costs constitute the largest share. Shipping costs for coal to India depend largely on global supply demand dynamics of not only coal but other dry bulk commodities.
From the shipping perspective, demand supply balance in the coal sector doesn’t influence charter rates. The way it works is like this: a dry bulk vessel carries coal, grains, iron ore, bauxite, alumina, fertilisers etc. Now, what the shipping companies do is quantify the entire demand for these commodities and then the shipping demand for these commodities and then they supply the total number of vessels as demanded.
At the moment, there is an oversupply of almost 25 percent in the vessel chartering industry across dry bulk commodities globally .
In that case, how have coal freight rates been behaving because of this oversupply?
Normally, coal buyers in India and elsewhere in the world are price takers. They are not price buyers. Whatever freight rates are floating in the charter market, these buyers will have to accept these. The volume of coal coming to India out of the total dry bulk commodity segment is just a fraction (less than 3 percent of the dry bulk cargo volume globally) And that is why coal buyers do not determine or influence the charter rates.
How have the freight rates been over the last few years and what factors influenced the trend?
Let me go back a little bit into history to explain this properly.
This story is from the October 2017 edition of Coal Insights.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the October 2017 edition of Coal Insights.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
SCCL's coal production up 64% in Q1
Coal production by SCCL during Q1 FY22 stood at 15.57mt, 64% higher than 9.50 mt achieved in Q1 FY21.
The UK to end thermal coal use in October 2024
The deadline to phase out coal from Great Britain’s energy system has been brought forward by a year as part of the UK government’s decision to go further in driving down emissions and tackling climate change.
Coal handled by major ports up 38.5% in Q1
The 12 major Indian ports handled 39.37 million tons (mt) of coal (thermal + coking) during April- June of FY22, up by 38.5 percent from 28.42 mt recorded in the corresponding quarter of FY21, according to data released by the Indian Ports Association (IPA).
Cement sector sees demand revival
Retail demand was under pressure during the first two months of FY22 with April and May production falling by 12 percent and 17 percent respectively month-on-month (m-o-m) as per Index of Industrial Production data.
Indian Railways' coal handling up 42% in Q1
Indian Railways in April-June of FY22 transported 157.78 million tons (mt) of coal, up by 42.4 percent from 110.80 mt handled in corresponding quarter of FY21.
CIL's coal production up 2.4% in Q1
Coal India’s (CIL) coal production during April-June quarter (Q1) of FY22 was up by 2.4 percent to 124 million tons (mt) as compared to 121 mt achieved during the same quarter last fiscal (FY21), according to (provisional) data released by the company.
India's May coal imports up 20% y-o-y
Coal and coke imports in May 2021 were up 20.44 percent year-on-year (y-o-y), according to import data available with Coal Insights. Imports rose to 19.92 million tons (mt) from 16.54 mt during May of previous year.
There is still a long way to go to squeeze coal out: BP
There are worrying signs that last year’s Covid-induced dip in carbon emissions will be short lived as the world economy recovers and lockdowns are lifted, says Bernard Looney Chief Executive Officer of BP in the recently published Statistical Review of World Energy 2021 published by the company.
“Growing Infrastrcuture is a big opportunity for OTR Tires in India”
India is now considered to be the largest market for Off-the-Road Tires (OTR) used in construction & mining industry. The opening up of the coal sector has provided further push to the potential usage of such tires. And Balkrishna Industries Ltd, a global player with diversified portfolio under the BKT brand across agriculture, industrial, construction, earthmoving, mining and port is set to seize the opportunity. Rajiv Poddar, Joint Managing Director, Balkrishna Industries Ltd., tells Arindam Bandyopadhyay of Coal Insights about the opportunities and outlook for the sector and the company.
SCCL's coal production up 69% in May
After putting up a dismal performance last year, Singareni Collieries Company Ltd (SCCL) has started the new fiscal on a high note. Coal production by SCCL in May 2021 surged to 5.44 million tons (mt), about 68.56 percent higher than 3.23 mt achieved in the same month last year, according to (provisional) data released by the company.
