India is likely to lose its competitive edge of being the biggest activated carbon exporter given an acute shortage of coconut shell charcoal, the main raw material for activated carbon production.
Faced with challenges like rising manufacturing cost, shrinking coconut shell and coconut charcoal availability, increasing global demand for gold carbon and fluctuating freight charges, activated carbon industry is struggling to keep afloat.
As a result, many activated carbon manufacturing units in South India are forced to hike working capital requirements and reduce the production capacity, according to Joshy Joseph, Director of INDCARB, the Palakkad based manufacturer and exporter of activated carbon.
Raw material shortage has been aggravated by the higher demand for ball coconuts used in the desiccated coconut sector and the increased consumption of tender coconuts as the temperatures soar in the summer. The coconut shell charcoal price is now trading in the range of ₹60,000-62,000 against ₹27,000-28,000 per tonne in January 2024, he said.
Over 50% export share
Out of the total exports of coconut products, he said the share of activated carbon was ₹2,108 crore in 2023-24. The figure in the previous year was ₹2,369 crore.
Industry sources said activated carbon enjoys good demand in the US, UK, Germany, Belgium, Italy, Japan, South Korea and African countries. It is used for water treatment in many western and developed countries and for gold extraction in African countries. Gold mining industry accounts for around 55-60 per cent usage of activated carbon and the surging gold price has raised its demand in the extraction of the yellow metal worldwide.
The global market for activated carbon is valued at $4.4 billion and is projected to touch $7 billion by 2028 with a CAGR of 9.5 per cent.
Association’s fiat to members
The emerging situation, according to Joshy Joseph, is likely to pave the way for Chinese companies to capture a significant share in the global activated carbon market, as there are reports that some firms are importing charcoal from the Philippines to operate plants.
The Activated Carbon Manufacturers Association of India has asked its members not to buy charcoal above ₹60,000 and shell above ₹20,000, which will not be good for Indian products to compete in global markets. As a temporary solution, they have requested the government to ban charcoal exports to protect the domestic industry. Last year, the charcoal exports were around 35,000-40,000 tonnes.
There are also allegations that some mediators under the pretext of charcoal traders are holding huge stock in anticipation of further spurt in price, the association said.
