India’s coal imports appear to be headed for another strong month in August, raising the question as to why the usually cost-sensitive market hasn’t scaled back purchases given a surge in prices to the highest in nearly seven years. According to vessel-tracking and port data compiled by Thomson Reuters, total coal imports may reach 17.7 million metric tons (mt) in August.

This figure may be revised as it becomes clearer when ships will arrive and discharge their cargoes, but the August imports are likely to be more or less in line with the 17.4 million mt imported in July, which was the strongest monthly outcome so far in 2018.

India’s coal imports have been exceptionally strong despite prices for thermal coal rising to the highest in 6.5 years, with the Australian benchmark Newcastle cargoes trading above AUD 120/mt recently, taking the year-to-date gain to around 18%. The gain in prices has been largely driven by strong Chinese imports.