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India's metallurgical coal demand for steelmaking exhibited a robust increase of 6% year on year, reaching 75 million tonnes in 2023 (calendar year, all of the following) compared to 71 million tonnes in 2022. Projections indicate a further surge in met coal demand to 82 million tonnes by 2025.
In terms of consumption, metallurgical coal utilization in steelmaking witnessed a notable 7% year-on-year growth, totaling 76 million tonnes in 2023. Given that India's dependence on imports is over 90%, increase in imports last year may appear to have been marginal.
Coal import scenario
India's imports of metallurgical coal in 2023 stood at around 71 million tonnes as against 69 million tonnes in 2022, an increase of 3%, as per latest SteelMint data. Rise in imports has been marginal considering the steady growth in domestic crude steel and hot metal production.
Factors driving marginal rise in met coal imports
Higher domestic production Coal India Ltd., contributing over 80% of domestic coal production, recorded a significant 10% growth in coking coal production, reaching approximately 59 million tonnes in 2023. Some Indian integrated mills also boosted production from their overseas coking coal assets to reduce reliance on imports. However, limitations in domestic coal washing capacity hinder efforts to minimize import dependency.
Seaborne trade volumes Australia's share in total Indian imports has declined from over 54% in 2022 to 48% last year. The volume of the U.S. and Canadian shipments increased on a yearly basis. Russian exports to India (mainly PCI) jumped 64%. Premium coking coal prices rose by 60% in the second half of 2023 and increasing volatility amid a narrow supply base impacted imports.
Higher PCI use to cut costs PCI imports experienced an 8% uptick, reaching nearly 15 million tonnes in 2023. Industry sources suggest that new blast furnaces are designed with additional capacity for PCI, with an expected PCI rate of approximately 200 kg/t of hot metal. This strategic increase in PCI usage serves as a vital cost reduction tool, contributing to a drop in the coke rate in blast furnace ironmaking and potentially minimizing dependence on prime coking coal.
To reduce reliance on coking coal imports, a meeting chaired by the Additional Secretary (Coal), Ministry of Coal, was scheduled for 17 January 2024. The focus was on addressing the anticipated Coal Demand in the Steel sector, analyzing the Coal import scenario, and understanding its implications on Coal import substitution to mitigate dependency. The Indian government's proactive measures, such as boosting global coking coal production and establishing local washeries, suggest a potential decline in India's coking coal imports in the upcoming years.
The article has been published under the exchange agreement between Sxcoal and CoalMint.
(Writing by Alex Guo Editing by Harry Huo)
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