34% drop in India's coal imports hurt thermal coal export market

It's a rapid downhill journey from here, expert said.

Indian coal imports fell 34% year on year (yoy) in the month of December 2015. This follows the record 49% yoy decline in November 2015 and brings the decline to 15% yoy over April-December 2015, according to Institute for Energy Economics and Financial Analysis (IEEFA).

This is contrary to almost all financial market and International Energy Agency (IEA) forecasts which still assume the global seaborne thermal coal demand will be underpinned by growth from India.

Here's more from IEEFA:

“India was essentially the last flame of hope for the beleaguered seaborne thermal coal industry. December’s import data confirms the last flicker has been snuffed out, not least for Australia’s Galilee Basin,” said Tim Buckley, Director of Energy Finance Studies at the IEEFA.

“Indian thermal coal imports look to have peaked in mid-2015, and are now set to permanently and rapidly decline. The IEA’s forecast of sustained thermal coal import growth into India looks outdated even as the latest 2015 report was printed,” he said.

The accelerating rate of decline in thermal coal imports into India is entirely consistent with Energy Minister Piyush Goyal’s target to cease thermal coal imports by 2017, with the exception of a few coastal power plants.

In it’s June 2015 forecast, the Australian Government’s Office of the Chief Economist (OCE) predicted domestic Indian coal production would only grow in line with the 2% annual growth achieved in the five years to 2013/14. However, Coal India Limited has reported its April-December 2015 coal production rose 9.1% yoy and coal dispatches rose at a higher 9.8% yoy as the rail system roadblocks are progressively removed.