Indian coal shipments rose 7% year on year in October after several months of weakness, offering signs of a recovery in demand for dry bulk transport, according to a BIMCO report carried by Hellenic Shipping News. Low inventories at power stations and strong electricity demand could underpin further purchases, although the outlook points to only limited growth in imports.
The earlier downturn has been particularly difficult for supramax vessels. India accounts for 17% of global seaborne coal shipments and is the world’s second-largest coal importer, making its purchasing patterns important to the wider shipping market. BIMCO’s Gouveia said supramax coal shipments to India had declined 16% year on year, compared with a 4% fall for panamaxes. Panamaxes increasingly competed with other vessel segments for coal cargoes, helping them limit their losses.
Import costs have risen as the rupee weakened and coal prices increased. The report linked firmer prices to stronger demand following disruption in the Strait of Hormuz. Tighter LNG supplies prompted the EU, Japan and South Korea to increase coal-fired electricity generation. Chinese imports also rose towards the end of the second quarter after a mining accident triggered inspection-related mine closures, reducing domestic output.
India’s coal-fired electricity generation increased by approximately 9% year on year, while domestic coal production grew by around 4%, according to the report. Higher solar and wind output did little to curb coal demand because a weaker monsoon associated with El Niño reduced hydroelectric generation. Inventory drawdowns, rather than additional imports, helped meet demand growth. By 1 November, 48% of Indian coal-fired power plants had critically low stocks.
Those depleted inventories likely added pressure on utilities to buy coal, with power shortages potentially providing another incentive. However, Gouveia cited an International Energy Agency forecast for Indian coal demand growth of just 2.5% in 2027. A recovery in hydropower could temper gains despite increasing electricity demand and industrial activity, while expanding domestic mining is expected to restrict import growth to a slight increase.