India’s thermal coal imports could rise by about 10 percent in 2019 due to rail transport problems and other logistical bottlenecks, an executive at the country’s largest coal trader Adani Enterprises said on Tuesday.

Thermal coal imports rose in 2018 after two years of decline, despite moves by Prime Minister Narendra Modi’s government to cut the country’s imports in a bid to reduce the trade deficit.

Rajendra Singh, chief operating officer for coal trading at Adani Enterprises, said thermal coal imports this year could total 174 million-177 million tons.

“We expect a 10 percent increase in imported coal because of an immediate gap in supply from Coal India and power demand and demand from other sectors,” Singh said at the Coaltrans conference.

Coal is among the top five commodities imported by India, and over three-fifths of its thermal coal imports come from Indonesia, while over a fifth is imported from South Africa.

India’s 2018 thermal coal imports rose at the fastest pace in four years, adding to India’s trade deficit and hurting the valuation of the rupee, the worst performing major Asian currency in 2018.

The Adani Group, which handles about a third of India’s imported coal, expects “rail transportation challenges” to lead to a “reasonable rise in imports” until fiscal year 2021 when they will stabilize.

Singh said he expects small and medium scale industries such as the sponge iron industry, tile manufacturers, cement producers and textiles to contribute to higher demand for seaborne coal, adding that an industrial shift from petcoke to coal was fueling higher imports.

Petcoke, or petroleum coke, is a refinery byproduct which is a dirtier alternative to coal. Its usage has been banned in some parts of the country, and policy flip-flops over its usage have led to a fall in demand for the fuel.

State-run Coal India Ltd, which accounts for four-fifths of India’s coal production, supplies largely to power plants rather than small and medium-scale industries.

Smaller scale industries have used imported coal in a big way, and while higher coal imports may be bad news for India’s trade deficit, they are a boon for international miners and global commodity merchants.
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