Continuing decline in coal imports to impact returns of port players: ICRA

India Infoline News Service | Mumbai | October 08, 2017 13:05 IST

The volume growth at major ports was low at 3% during the first five months of current fiscal, FY2018 as coal volumes recorded 12% decline during the period, even as iron ore volumes grew 29%.

The volume growth at major ports was low at 3% during the first five months of current fiscal, FY2018 as coal volumes recorded 12% decline during the period, even as iron ore volumes grew 29%.

"The continuing decline in coal volumes, at a more rapid rate, as compared to the previous periods, is a concern over the long-term for the port sector since many ports and terminals have significant dependence on coal imports. A prolonged decline in coal import requirement in the absence of diversification into other cargo categories will impact the returns for such port sector players," said Senior Vice President and Group Head, Corporate Ratings ICRA, K Ravichandran.

Cargo throughput at Indian ports registered a 5.7% growth to 1,133 MT during FY2017 as against 1,072 MT recorded in FY2016. The growth was supported by 133% growth in iron ore cargo volumes (82 MT against 35 MT) supported by a resumption of mining operations in Goa, Karnataka and Orissa as well as healthy growth of 6% in POL and Liquids (petroleum, oil and lubricants) and other cargo (9%). However, volume of coal was down by 9% during the period as demand side issues and higher domestic production continued to reduce the domestic demand-supply deficit.

In terms of the cargo growth outlook, port sector players will continue to experience healthy growth in cargo in the near-term, albeit somewhat lower compared to the recent fiscals, as revival in iron ore exports, pick up in POL volumes as well as impetus for coastal shipping will be partially offset by lower coal imports and slowdown in container volumes due to weak exim trade.

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