Decline in coal import likely to impact port performance

According to a recent note from credit rating agency ICRA, modest decline in coal import during the first five months of the current fiscal has resulted in marginal throughput growth at the major ports. “ Major ports have reported only a tepid 1.9% cargo growth in the first five months of FY2020 from 289 MT to 294 MT. Healthy volume growth in container, crude and iron ore segments was offset by the decline in coal and some other bulk cargo volumes. As per ICRA note, the volume growth at major ports has been impacted by 4% fall in coal volumes (63.6 MT vs 66.3 MT) and some decline in fertilizer and liquid volumes. Coal volumes at major ports had grown 11% in FY2019,” the note says.

The note further indicates of a further pressure on coal import volume if the demand does not pick up in the remaining part of the fiscal. This, in turn, will also impact the performance of the major ports in FY 2020. Ankit Patel, Vice President and Co-Head – Corporate Ratings, ICRA said, “If demand from power sector remains tepid and industrial demand also remains slack, there is a possibility of further pressure on coal import volumes. Over the long term, a sustainable pick-up in industrial activity and power demand will be crucial for the sustenance of healthy coal imports as domestic production also ramps up to meet the incremental demand. CIL’s supply is likely to increase every year by 5-7% at least and this will continue to be a risk for port players that are highly dependent on coal volumes for optimal utilisation of their port capacities.”

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