A Stealth 19% Jump in Demand For This Commodity

As I discussed last week, the commentary around the global coal business has been doom and gloom lately.

But few investors recognize that the market is booming in one part of the world: India.

Local statistics released this week show that the Indian coal story is still very much going strong. With the current year yielding double-digit growth in demand.

Reuters interviewed India’s Coal Secretary Anil Swarup on Tuesday. With the Secretary noting that India’s coal imports are likely to come in at 200 million tonnes for the fiscal year ended March 31. 

That would be another record year of imports for India. And would also represent a 19% jump over the previous fiscal year.

More than that, it would continue a five-year pattern that has seen India’s coal imports shoot through the roof. As the chart below demonstrates, since the 2010-11 fiscal year, imports are up an astounding 190%.

Screen Shot 2015-03-26 at 10.45.06 AM

Source: Press Information Bureau of India, Reuters, Pierce Points

If this year’s import numbers do indeed come in as expected, it confirms that the Indian coal market is one of the strongest spots going for any commodity on the planet. There simply aren’t many places these days seeing double-digit yearly demand growth — let alone consistently over a five-year period.

This could spell an important opportunity for the right coal projects. Specifically, those positioned to sell into the high-demand Indian market.

Of course, one x-factor in all of this is India’s domestic coal production. Which lately has seen zero growth, due to issues with legal and regulatory approvals, and problems with transport infrastructure.

The government says this will change during the coming year — with officials expecting state-owned Coal India to up production by 10%, or about 50 million tonnes. Such an outcome however, remains far from certain. Watch for development of new mining projects — and production figures from the state.

Here’s to a bright spot,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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