Under the tremendous production pressure, Coal India foresees fierce competition raises from private sector in the near future. Gopal Singh, chairman of Coal India said to employees:” There would be more challenges ahead. In the coming years, mines for commercial exploitation will be offered to the private sector, and in the not-too-distant future, private sector production would be the key in the coal market.” This change makes production cost decrease an inevitable action for market participants.
In January, Coal India raised non-coking coal prices which brought a Rs 311 lift of its stock. Coal India began to make effort to shift its pricing policy and decided to charge customers on energy content in coal since April, 2018. Gopal Singh believes the new pricing policy is the effective way to lower the power generation cost as it had reduced nearly Rs 162 per tonne compared with present coal price chart.
Meanwhile, in order to pay for the increasing salaries of the labors, thermal coal price has also been pushed up by 9% for both power and non-power customers, which would result in Rs 1956 crore of incremental revenue in the financial year ending March 31, 2018. “To be in line with government’s vision to rely less on imports, we have reduced prices of higher grades to improve market competitiveness,” said by Coal India marketing director, S.N. Prasad, “The net growth in revenue will help us cover the salary increases and support future capital investments.”
Coal India, which is world’s largest coal producing company, accounts for almost 85% of total coal production in India. To cope with the robust demand of domestic and overseas market, Coal India aims to grow volumes by 9% before 2019 and is also planning to build 15 more washeries with a total supply of 112.6MT. After 3-year successive revenue growth, Coal India is expected to increase its revenue by 7% CAGR in the period of 2018-2019. Coal India believes that Indian government is encouraging local coal producers to responsible more for domestic coal market, which will help maintain the growth momentum.
To the global market, energy commodities prices include coal, oil, natural gas are estimated to increase climb 4% to about $85/ton in 2018 according to October Commodity Markets Outlook, which is accord with 2018 World Coal Price Forecast. JumoreGlobal Insights will keep watching Coal India’s policy updates and world’s coal market information.