The fundamentals for Indian coal imports continue to look promising

The fundamentals for Indian coal imports continue to look promising frontpage

Back in August we reported that the fundamentals impacting Indian coal imports looked more promising 

Trade flow data today implies 17.4Mt of imports in November 19.0Mt in December and 16.2Mt in January.  Based on trade flow data we estimate imports in Oct-Dec 17 to be up about 30% YoY while we estimate imports in January to be up 17% YoY. The positive outlook has thus come into fruition.

Indian coal output vs. thermal generation and india coal stock mines graphs

The combined coal stocks at mines and powerplants has increased from a low point of 36Mt at the end of October to 48Mt at the end of January. Measured as days worth of inventories at powerplants, the combined stocks have increased from 24.4 at the end of October to 29.8 days at the end of January. However, this has happened in a period where stocks seasonally tend to increase. Thus, compared to previous years the stocks are still at very low level.

Indian Cement production and indian coal import graphs

On the demand side, we see some clear signs that Indian economy is recovering from the negative short term effects of the demonetization introduced in November 2016. If we use the data for Indian cement production as a proxy for the activity level we can clearly see how the activity has accelerated sequentially since August 2017.

Thus, we think the imports will continue at a strong pace going forward as the underlying fundamentals continue to look promising. (Klaveness Research)