IMPORTED THERMAL COAL

MAJOR CHARACTERISTICS

Coal Composition and Mining

Coal, a fossil fuel, is a combustible sedimentary rock found in coal beds, composed primarily of carbon alongside varying amounts of sulfur, hydrogen, oxygen, and nitrogen. It is extracted from the ground through mining, either underground or in open pits.

Coalification and Coal Ranks

The transformation of coal from peat to anthracite, known as coalification, significantly impacts its physical and chemical properties. The “rank” of coal denotes its degree of maturation.

Coal Types and Utilization

Low Rank Coals: Comprising lignite or brown coal (17%) and sub-bituminous coal (30%), utilized predominantly for power generation and various industrial applications.
Hard Coal: Encompassing bituminous coal (52%) and anthracite (1%), with bituminous coal further classified into thermal/steam coal and metallurgical/coking coal. Used extensively in power generation, cement manufacturing, and iron and steel production.

GLOBAL SCENARIO

Coal Reserves and Production

Global proven coal reserves, estimated to last for 122 years at current production levels, are found in around 70 countries. USA, Russia, China, India, and Australia hold significant shares of these reserves.
Global hard coal and brown coal (lignite) production totaled 5845 million tonnes (m.t.) and 951 million tonnes respectively in 2008.

Coal Consumption and Electricity Generation

Coal meets 26.5% of global primary energy needs and generates 41.5% of the world’s electricity. Key coal-dependent countries include South Africa, China, Australia, India, and the USA.
The steel industry consumes approximately 13% of total hard coal production, with coal providing a backbone to almost 70% of global steel production.

Coal Trade

Global hard coal trade in 2008 amounted to around 938 m.t., with major exporters including Indonesia, Australia, Russia, and Columbia, and major importers comprising Japan, Korea, and Chinese Taipei.

WORLD THERMAL COAL MARKETS

The Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME) operate the world’s most liquid coal derivative markets, offering futures contracts for European, South African, and global thermal coal.

INDIAN SCENARIO

Coal Production and Reserves in India

India, heavily reliant on coal for energy needs, is the world’s third-largest coal producer, with an estimated production of around 493 million tonnes in 2008-09.
India’s hard coal reserves, totaling approximately 246 billion tonnes, are predominantly found in eastern and south-central regions, while lignite reserves stand at around 36 billion tonnes, primarily in Tamil Nadu.

Coal Imports and Dependency

Despite vast reserves, India has become increasingly reliant on thermal coal imports, with total imports estimated at 60 million tonnes in 2008, driven by poor quality indigenous coal supplies and logistical challenges.
Thermal coal imports have surged from 10.31 million tonnes in 2002-03 to 28.9 million tonnes in 2007-08, projected to further increase in the coming years.

MARKET INFLUENCING FACTORS

Coal demand is closely linked to energy demand, particularly in countries like China and India, which heavily rely on coal for power generation.
Economic scenarios in emerging markets, especially China and India, significantly impact coal demand and prices.
Coal prices are influenced by the price dynamics of other fossil fuels, such as oil and gas, as higher prices for these fuels may drive increased demand for coal.
Despite being finite, coal supply remains robust in the medium term, supported by large global reserves and advancing extraction technologies.
Macro-economic factors, including global economic conditions, currency fluctuations, geopolitical tensions, and interest rates, also influence coal prices as a globally traded commodity.