According to a report yesterday by S&P Global Platts, India is now facing ‘a coal crisis’ as the country’s reserves have fallen from about 37 million tonnes at the beginning of the year to little more than eight million tonnes at the end of September.
Stocks last week were equivalent to just five days of typical coal burn and the country must now embark on an urgent re-stocking strategy. According to figures from S&P Global Platts Analytics, average Indian power demand over the last quarter of the year is likely to average 167 GW, of which coal is expected to contribute 126 GW. Vast amounts are required.
Since January, thermal coal prices in Indonesia, one of India’s key suppliers, have soared from just over $44 per tonne to more than $100. Prices have also risen amongst the country’s other suppliers – including Australia, Columbia, Russia, and South Africa – and coal futures contracts hit a new record this week, at $240/tonne, up from less than $60 a year ago.
Meanwhile, large numbers of laden bulk carriers are delayed in various locations, particularly off key Chinese ports where Covid-related regulations pose a major ship management challenge. Analysts’ estimates vary but about 7 - 10% of the total dry bulk fleet is now estimated to be out of action due to port delays, although mining giant BHP recently estimated it to be considerably higher at up to 15% of the fleet.
The Indian coal factor is the latest aspect of dry bulk market supply-demand disruption which has seen the Baltic Exchange’s Dry Index climb rapidly. It closed at 5,409 yesterday, up 207 points since the beginning of the month. The Capesize Index, meanwhile, hit 9,752, clocking a 5% increase of 463 points on the previous close.
Both indices are now at their highest levels since September 2008 and still rising. Meanwhile, Clarkson’s latest weighted average estimates have Capesizes at almost $69,000 a day, more than double the ten-year average. Across the four key bulk vessel categories, Clarkson’s 2021 weighted average of $25,510 is 135% higher than the ten-year figure.
Copyright © 2021. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.