Coal Importers Face Huge Loss as Stocks at Indian Ports Top 11 million Tonne.

ET reported that more than 11 million tonnes of imported coal are stacked at Indian ports for over 4r months as power producers refuse to buy costly coal despite acute fuel shortage.

The importers face huge loss as the depreciation of the rupee and the recent fall in international coal prices add to their woes. Global coal prices have come down by USD 5 a tonne in the past few months due to slowdown in various economies. And rupee fell to a two and half year low of 50.42 against dollar on the back of weak industrial production data and a sliding stock market.

Industry insiders said coal stockpile at various ports reached record level as traders were initially not willing to sell the commodity at loss. Disinterest among power generating companies to blend imported coal that increases electricity tariff also led to the glut.

Industry sources said that traders are under pressure from creditors wanted to sell quickly.

A senior official in Bhatia International said that "About 11.57 million tonnes of coal is lying at the ports. The traders, mostly small and inexperienced ones, bought coal from Indonesia and South Africa at higher prices. But the traders are holding the stock as they would not even be able to recover the costs with the kind of purchase offers being received.”

A senior official in Adani Enterprises said that "The traders placed coal supply orders a few months back when the rupee was trading at about 43 to 44 to a dollar. When the coal landed at the ports, rupee had started to fall and was about 48 to a dollar. Today, they are receiving enquiries at about 7% less than the prevailing price.”

A senior NTPC official said the company was blending 10 to 15% of imported coal at most of its stations, but there were no buyers for expensive power generated by burning imported coal.

Jindal Power's Mr RS Sharma said this could be a good opportunity for power companies to procure imported coal at low prices, but there was no demand for costly electricity. He said blending 10% of the imported fuel rises electricity tariff by 35 to 40 paise. Cash strapped distribution utilities were resorting to load shedding rather than purchasing electricity.

Source : steelguru.com