Drop in iron ore traffic pulled down the overall cargo volume growth at country's ports, which registered a modest 2% increase yearly to 516 million tonnes during the first half of FY16.
Latest ICRA report on Indian Ports Sector says growth was pegged down by a de-growth in volumes by 1% at non-major ports, which had registered a 13% yoy growth in volumes to 471 million tonnes in FY2015.
The weak performance was on account of 18% drop in iron ore volumes, 11% drop in other cargo and an 8% drop in coal volumes, the analysis by ICRA showed.
Major ports on the other hand, registered a relatively better performance in H1 FY2016, supported by growth of 12%, 3% and 11% in coal, POL and other cargo volumes, respectively, even as iron ore volumes dropped by 48% yoy.
Iron ore volumes have been declining as mining restrictions prevailed during a large part of the year in major states like Karnataka, Goa and Odisha and other policy measures such as high export duty.
While mining bans have been lifted in these states over the last few months and export duty on low grade iron ore had been relaxed (from 30% to 10%) in May 2015, mining activities are yet to commence in full flow. Iron ore export has also been stifled on account of the prevailing slump in international demand and prices.
ICRA said that coal import volume growth in the last few months has remained lower than expected due to increase in the domestic production and subdued demand on account of the slowdown in energy demand and delays in commissioning of new power plants due to several issues be-deviling the domestic power sector.
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As non-major ports had higher share of coal cargo, their volumes were relatively more impacted during H1 FY2016, reporting 7% decline as compared to the 12% growth registered by major ports during the same period (although lower than 21% registered in FY2014 and 14% registered in FY2015).
During the first 11 months of FY2016, the cargo throughput at major ports has registered a 4.2% growth over the corresponding period of previous year. The growth was supported by an increase in all cargoes except iron ore (-29%) due to reasons mentioned above. POL, other cargo and container cargo registered a modest increase of 4.3%, 6.0% and 2.8%, respectively.
"While container cargo growth is supported by higher trans-shipment volumes, POL cargo growth is supported by demand growth for petroleum products, given the prevailing low prices. POL volumes had earlier remained almost flat over FY2013-FY2015 due to delays in commissioning of new refineries (Indian Oil Corporation’s [IOC’s] Paradip refinery) and pipeline maintenance under process)," the report claimed.
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