India’s coal trade is moving in two different directions. Thermal coal imports are lower, while Russian coal arrivals are increasing. For dry bulk, the impact depends on which cargo is being lost and which cargo is replacing it. Indonesian thermal coal and Russian coal do not create the same vessel demand. Indian thermal coal imports were about 65 million tonnes in January-May, down 12% year-on-year. This was the lowest January-May volume in four years. The decline did not come from weak electricity consumption. Total power generation increased 5% in the first five months of the year. India still needed more power, but a larger part of that demand was covered by domestic coal and renewables.
Renewable generation rose 22% in January-May. In May, renewable output increased 29.31% year-on-year to 27.58 billion kWh and reached 17.9% of the power mix. Peak power demand exceeded 270 GW on 21 May, and total power demand in May rose 11.2% to a two-year high. Thermal generation also increased 10% in May.
The market had strong power demand, but imported thermal coal was not the main balancing source. This changes the position for Panamax and Supramax vessels trading in the Indian Ocean. Indonesian coal into India has been a regular employment source for these segments. The voyage is short, but the cargo flow is frequent. It supports fixing around Indonesia, Singapore, the Bay of Bengal and the Indian coast. When Indian utilities reduce imported thermal coal purchases, the first effect is lower regional cargo availability, not necessarily lower tonne-mile demand across the whole coal market. Owners should be careful with heatwave assumptions. Higher temperatures can lift electricity demand, but they do not automatically produce a large import response. If domestic coal stocks are available and renewable generation is strong, utilities can reduce spot import requirements. Coastal plants may still need imported coal, and sudden supply stress can still support prompt demand, but the link between power demand and seaborne thermal coal demand is weaker than before.
The other part of the trade is Russian coal. India’s Russian coal arrivals are estimated near 3.16 million tonnes in June, close to record levels. Russia is becoming a larger supplier to India, partly through thermal coal and partly through metallurgical coal. The metallurgical coal angle is important for shipping. India has large domestic thermal coal reserves, but it does not have enough high -quality coking coal for steelmaking.
India’s steel output is around 168 million tonnes, with a longerterm target of 400 million tonnes by 2035. Unless the steelmaking route changes much faster, imported coking coal remains necessary. That supports coal demand from suppliers outside the usual short-haul thermal coal trade. Russian coal can therefore grow even while thermal coal imports into the power sector fall. The vessel impact is different. Indonesian thermal coal into India is short-haul and repetitive. It creates steady employment but fewer tonne-miles per tonne. Russian coal involves longer distances and more operational issues. Routing, sanctions, banking, insurance and port handling can all affect execution. A cargo from Russia can absorb more vessel time than an Indonesian stem, but it can also be less predictable.
For Panamax and Supramax owners, the replacement effect is the main issue. If India removes part of the Indonesian thermal coal book and adds more Russian coal, vessel demand will depend on the balance between lost short-haul volume and added longer-haul cargo. A lower thermal coal import number does not always mean weaker dry bulk demand. It depends on origin, coal type, voyage length and execution risk. For charterers, the risk is that fewer total imports do not automatically translate into easier freight. If the remaining cargo programme includes more longerhaul Russian coal or more complex metallurgical coal flows, vessel availability can still tighten in specific positions. India should be tracked by coal type and supplier, not only by total coal import volume.
The main point is that India’s coal trade is becoming less useful as a simple volume indicator. A fall in thermal coal imports is negative for short-haul Indonesian employment, but higher Russian coal flows can offset part of that loss through longer voyages and more vessel time. The effect will not be equal across segments or loading areas. Panamax and Supramax demand will depend on how much short-haul utility coal is removed, how much Russian or metallurgical coal is added, and where the replacement cargoes are loaded. For the next few months, Indian coal imports should be followed by origin and coal type before drawing conclusions on freight direction.
Data Source: Intermodal