The Hindu Business Line : Congestion afar, `loads' of problems at home

This month the throughput of imported coking coal in the three east coast ports of Haldia, Paradip and Visakhapatnam will be less than projected, according to informed sources. Interestingly, neither the ports concerned, nor the Railways nor the importers will be responsible for it. An acute congestion in the loading ports in far-off Australia is believed to have contributed to a situation which is causing concern to Indian ports, the railways and others. The pre-berthing detention that lasted seven-ten days has gone up to nearly 30 days. At one point, Newcastle, the world's largest coal handling port, had as many as 90 ships waiting.

Jump in Imports

Steel Authority of India Limited (SAIL), the major importer of coking coal from Australia, in consultation the Railways, has decided to import, mostly from Australia, more than 13 million tonnes of coking coal this fiscal through the three ports. This is a 30 per cent jump over the previous year's imports of 10 mt, or so. In other words, the monthly throughput this fiscal will be around 1.1 mt in all the three ports taken together.

Accordingly, the monthly loading programme has been fixed as follows: 115 rakes at Visakhapatnam, 75 at Paradip and 140 at Haldia. The actual arrivals this month, it is estimated, will be about seven lakh tonnes. Consequently, the monthly loading figures too have been scaled down to 90 rakes for Visakhapatnam, 31 for Paradip and 100 for Haldia. The situation in May is unlikely to be very different, it is felt.

RINL, another public sector steel giant that imports about 3 mt of coking coal from Australia every year, too is keeping its fingers crossed. It has so far managed to maintain normal production by drawing on the stocks and from local supplies but this cannot last long. A section in the steel sector, however, hopes that the situation will improve before long. The congestion is Australian ports, it is conceded, has pushed up the shipping freight and the delayed arrivals of the imports have thrown up several problems. Yet, steel production has not been hit.

Monsoon Worries

Both the Railways and the port authorities concerned are worried, especially because the monsoon, due to set in shortly, is a bad period from the cargo-handling point of view. Unless the actual loading in pre-monsoon and post-monsoon months exceeds the projected average, the targeted throughput for the whole year will be difficult to achieve.

The present congestion in the Australian ports is believed to have been caused by several factors such as bottlenecks in the railway systems, expansion work in some of the major coal ports, and other factors. For example, the bottlenecks in the railway systems in New South Wales have prevented miners from executing orders on time, causing ships to queue up and hiking the cost for suppliers.

The capacity expansion work at the Newcastle port, from the present 100 mt to 166 mt by 2009, has affected the normal functioning of the port, creating the problem of congestion. Among other factors are accidents and unfavourable weather condition.

As already reported, the congestion in Australian ports has created shortage of certain types of bulk carriers in the world market, pushing up the dry bulk freight rates. Some Indian steel producers, meeting their requirements through spot purchases, are wondering if they should not go whole hog for the Contract of Affreightment (COA), even if it is for a short period.

At least one state-owned steel plant that imported partly through COA and partly through spot deals is now mulling to opt for more COAs through Transchart after the expiry of the present COA.

Larger Vessels

The purpose is to reduce dependence on spot purchases which have become costly now. Another steel plant is planning to opt for more of bigger size vessels, such as Panamax and Super Panamax, in preference to the Handymax types as the larger average parcel load might entail freight advantage. However, in the present situation, large vessels may not be easy to get for transportation of coal from the Australian ports. India's steel sector imports an estimated 20 million tonnes of coking coal from Australia and the volume will continue to rise.

According to one estimate, by 2010 the steel sector's requirement of coking coal will rise to 40 mt, the bulk of which, 35 mt or so, is to be met from imports, and by 2020 the requirement is set to rise to 70 mt, 85 per cent of which will be imported. The present situation may be an eye opener to the importers about the kind of strategy they might be required to work out in the event of any exigency in future.

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