The global coal prices is under constrains owing to the oversupply.
China, known to produce almost 50% of the world’s Steel output has reduced its coal imports. Now it is looking forward to use cleaner fuel such as hydro-electricity and gas powered thermal plants for the production of Steel. Furthermore, The National Energy Administration plans to ban coal imports with less than 4,540 kcal on a net-as-received basis, ash content more than 25% and Sulphur content more than 1%. However, NEA has not declared the time. How far will this impact the coal production is yet to be accessed.
Indonesia makes up about 45.3% of the total coal imports in India (source Steel 360 research). In order to make price correction arisen due to a steep depreciation in INR towards August end, India is in a process to renegotiate its contract with Indonesia. Nevertheless, due to Indonesian new policy that forbids sales of coal below the international price benchmark, fades all possible chances of this negotiation to occur.
Assessing the domestic coal production in India, CIL output has been lower than the international benchmark of 5,200 kcal/kg gross calorific value commands a rate of INR 1,250 per tonne for fertilizers, defense sector and power utilities and 1,690 per tonne for other industries which is 75% lower than the international rates.
Contrastingly, Australia is making use of the opportunity surfaced due to a fall in Australian dollar vs. USD. Unlike other nations, they are increasing the Coal production in order to export. It is worth noticing that the prices were eroded only to a 5.8% in terms of Australian dollars the fall by 13% was recorded in terms of USD. Newcastle, a well known exporter of some of the best coal in the world crashed by 13.1% to USD 81.45 tonne in 2013. In coming months coal prices might show an upward trend owing to production cuts by the miners, but only to a marginal level.