The global slowdown has taken a toll on those who import coal and has, in the process, shifted the balance of power in favour of domestic buyers. Coal importers have incurred losses as many potential buyers went back on prices that were originally agreed and supply contracts were renegotiated at a lesser price.
A coal industry official said the ongoing downturn in the coal market gave buyers an opportunity to revise the prices of the contracts and the importers made losses on the coal stock that was bought before the crash in prices.
Mr Bijay Mandani CMD of Maheswari Brothers said that “There is a high level of volatility in the international price of coal, which is to the extent of USD 10 per tonne to USD 15 per tonne on any given day. This is what is hitting the importers badly. Depending on where coal has been imported from, importers will be facing a huge loss on their ground stock on account of the price fall.”
Another importer said that “The pressure is clearly being felt and according to one importer, its contract with a large thermal power company was renegotiated late last year. We were forced to sell non coking coal at a discount of 30% to 35% per tonne.”
India’s demand for coal has been increasing by around 9% each year with a large part of it being met by imports from Indonesia, South Africa, China and Australia. The import of non coking coal has gone up from 29 million tonne in 2007-08 to 38 million tonne in 2008-09.
Source: Economic Times
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