Domestic ports turn the tide, log growth - Essar | Creating Value

Domestic ports turn the tide, log growth

Business Standard

Aug 20th, 2019

Ports are busting the downturn amid slowing economic growth in multiple segments such as banking, automobile, steel, etc. The country’s port sector has witnessed growth in cargo volumes. Among private players, Adani Port’s cargo grew by l6 percent year-on-year to 57 million tonnes in April-June, ahead of brokerage estimates of 54.5 million tonnes. Essar Ports, on the other hand, saw its cargo go up 17 per cent in April-June on the back of the contributions of Hazira, Salaya and Vishakhapatnam ports. The company handled bulk cargo in the steel, power, and cement sectors. Major ports too witnessed growth in cargo during the same period. The country’s 12 major ports handled 236 million tonnes.

“Power consumption has increased at a very good rate for the first four to five months (April onwards). Due to this, there is double-digit thermal coal growth in imports. It is one of the main items that have led to volume growth,” Rajiv Agarwal, chief executive officer and managing director, Essar Ports, told Business Standard. In the April-June quarter, Adani Port’s coal and bulk cargo grew by 38 per cent and 33 per cent, respectively. “We are reducing our captive coal usage and switching to increasing imports of thermal coal because prices globally have dropped significantly,” said Satish Pai, managing director, Hindalco Industries. The Aditya Birla Group company uses thermal coal for its power plant for the alumina refinery. Normally the company sources its thermal coal via linkages, e-auctioning, captive and imports.

“Apart from coal, iron ore is another commodity for which exports and coastal movement have increased. The slowdown in the steel sector could be on realisation but from the steel production perspective, volumes are intact and so is the requirement of iron ore,” said Agarwal. Private port players are of the view that cargo growth is a combination of fresh cargo coming in, customers repeating orders, and cargo pulled from competition. “Our Salaya bulk terminal handled all fresh cargo. It was mainly coal, limestone and petcoke,” said Agarwal. According to the Indian Ports Association data for April-July this year, the country’s thermal coal traffic saw a drop of 10 per cent from the same period last year. “It will be hard to give a break-up in terms of how much was new cargo versus how much was pulled from the major ports. The number you should look at is that all-India ports grew by 8 per cent versus our growth of 18 per cent, so there is definitely some cargo which has been pulled from competition,” says Karan Adani, CEO, Adani Ports.

Source : Business Standard