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Interview: Sanjay Kumar, Head of Solid Fuels Strategic Sourcing, Lafarge India Ltd

Sanjay Kumar talks to Coaltrans about the thermal coal price rally, supply security in the near to medium-term and the likelihood of coal making a comeback in the cement industry.





Coaltrans Conferences (CC): Thermal coal is currently seeing a historic price rally. Do you think that such high prices are sustainable? Where do you expect to see the price of thermal coal into India in 2017? What would be the ideal price range for your business?

Sanjay Kumar (SK): This price rally is due to increase in demand from China and lower production / export from Indonesia. This is definitely not sustainable. The prices of thermal coal from the high levels of 95-100 USD/MT of API4 is expected to settle in 70s FOB level.


CC: The Indian government is seeking to end coal imports by 2020 and state-owned miners have massively ramped up domestic production. What factors do you take into consideration when balancing your import basket? Have current prices had an impact on your procurement strategy?

SK: We look at the delivered price of energy at plant. This means that inland logistics play a crucial role in the decision making. High CV coal is for northern plants at large distance from port whereas low CV import can work for the port based plant. Due to the current market price at such high levels, the procurement strategy is to look for other fuels apart from Petcoke like Lignite, Biomass, etc and also buy only to meet the requirement for short term. Once the price stabilises in Q2, we can go for long term procurement (6 months / 1 year)


CC: Global investment in coal mining has dropped off enormously during the recent downswing. Are you concerned about supply security in the near to medium-term?

SK: From India's point of view, the Government of India is aiming to make India a self-sufficient country in terms of coal. Hence, the scenario will only improve from the current condition. With ease in doing business and policy change from the government, India is a logical destination for the investors. I do not see it as a concern in long run.


CC: Petcoke has recently overtaken coal as the primary fuel source for cement production. Do you think that coal will ever make a comeback in the Indian cement industry? Do current prices make this an impossibility? How do you see the petcoke supply/demand situation evolving over the next fiscal?

SK: Petcoke will be always sold on 15-20% discount to coal. It is well suited for cement industry. Hence, there is less probability of coal making a comeback in cement industry. However, petcoke is also a global commodity like coal. The demand is increasing from India and SEA market. It will be always traded with a discount to coal. Additionally, the environmental emission norms in India will play a key role for the future supply & demand.


CC: Finally, you’re speaking at Coaltrans India in February. What are you most looking forward to hearing about at the conference?

SK: Coaltrans is a good place to meet industry peers and get an update from the experts on future market scenario. This also gives us an opportunity to look into the strategy of industry leaders towards both fuel mix and procurement strategy.



You can hear more from Sanjay at the 16th Coaltrans India where he will be discussing the question Can coal compete with petcoke in cement production?

 

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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