Comments
The scheduled introduction of bench-mark prices – referred as HBA Index – by Indonesia beginning September 23, may not impact bulk of the users of Indonesian coal in India.
According to international traders, catering to the vast majority of the users – including some power utilities – through spot buying, coal prices in Indonesia are either at par or higher than the indexed price and, are unlikely to be impacted.
However, the Indian users sourcing coal through long-term off-take agreements at attractive prices much below the HBA Index, should be impacted. India is expected to import anything between 70-100 million tonne of Indonesian coal this fiscal. Unofficial estimates suggest that 60 per cent of that is procured through spot or short-term contracts.
The prices are, however, expected to move northwards in the longer run, especially after November, riding on an anticipated winter demand from China. Demand from China has reportedly remained subdued for sometime.
“There benchmark price will have little or no impact on landed price of majority of the coal imported in India as majority of the Indonesian miners are already selling their produce at a higher price,” Mr Abhay Chaturvedi, Vice-President (Procurement) of Nagpur based Gupta Coal (India) Ltd, told Business Line .
Sources in Kolkata-based private sector power utility CESC Ltd are not expecting any price rise either. “We are currently buying Indonesian coal of 5000 GCV (gross at receipt) at $80 a tonne. HBA Index pegs the value of such coal at approximately $77 a tonne,” a source said.
According to an industry analyst with a trade journal, who does not want to be identified, the introduction of the index will actually prevent under-invoicing of consignments by a section of Indonesian miners (as well as Indian importers), as was intended by the South-East Asian nation.
“The HBA index is linked to other indexes used by the trade in the world and simply reflects the market value,” he added.
A Kolkata-based importer, however, told on condition of anonymity that the new norms should impact prices by 8-10 per cent.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.