Companies

Suppliers offer no rebates for long-term imports: Coal India

Vishwanath Kulkarni New Delhi | Updated on November 17, 2017

Mr. N. C. Jha, Chairman, Coal India Ltd

Thermal coal prices rule firm amidst rising global demand





Amidst a firm trend in prices, global suppliers have not offered any discounts to Coal India's (CIL) proposed imports under the long-term off-take plan. The company has received a total of 28 bids from 16 global firms to supply 360 million tonnes of coal over a ten year-period.

“… no rebates are forthcoming even for the long-term off-take contracts for 10 years and the prices are linked to international index,” Coal India Chairman, Mr N.C. Jha, told the industry representatives at a recent interactive session.

As part of the long-term off-take plan, Coal India is seeking to import the commodity to bridge the rising demand-supply gap. The company was expecting suppliers to offer a discount to the market price, as part of the long-term off-take.

Coal prices

The reluctance of suppliers to offer discounts for such long-term deals stems from the fact that thermal coal prices have been ruling firm in recent months, amidst rising global demand for the commodity.

According to BP 2011 Statistical Review of World Energy, the thermal coal consumption in the global energy mix in 2011 rose to 29.6 per cent — the highest since 1970. In 2001, coal accounted for 25.6 per cent of the global energy market. According to Platts, the total global coal consumption grew 7.6 per cent year-on-year to 3.55 billion — its highest growth rate since 2003.

Besides pursuing the long-term off-take plan, Coal India is also looking at overseas acquisitions that could help the world's largest coal producer to ease supplies back home.

Import

India imported 69.76 million tonnes of coal in the financial year-ended March 2011 as domestic output, constrained by environmental regulations, was insufficient to meet the growing demand.

For the current fiscal, the shortfall in coal demand-supply has been pegged at 142 million tonnes. The demand for fiscal 2012 is estimated at 696 million tonnes, while the domestic output is projected to be around 554 million tonnes.

Coal India and its subsidiaries have set a production target of 452 million tonnes for the current financial year as against 431 million tonnes produced last year.

Published on June 18, 2011

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