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Monday, 29 June 20
INDIA COAL IMPORT OUTLOOK: WEAK DEMAND, IMPORT SUBSTITUTION, EXPECT 20% YOY DECLINE - GHEE PEH | IEEFA
 For India, the coal demand indicators have clearly turned negative.
According to Argus Media, since the government declared a nationwide lockdown on 25 March, the country’s daily average power output has been 20% lower than the three-year seasonal average. It estimates power sector coal usage may have fallen by as much as 10mt of NAR 5,000 kcal/kg-equivalent coal to 30mt in April. McCloskey Coal reports that India’s coal stockpile is at 165mt and that nearly half (80mt) is at CIL and other mines. This amount represents 30 to 40 days use. Power plant stocks were at 50mt,which is enough for 29 days. Other indicators, such as imports, domestic coal output, and power and steel output, all point to a large year-on-year decline for India’s coal imports.
Industry observers expect a 20%year-on-yearfall in 2020 India’s coal imports. This is in line with our forecast, but we believe there may be further downside risks. As a result of these, IEEFA expects India to import less Indonesian coal, based on our evaluation of the following four key variables:
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Coal imports: After recording year-on-year growth for January, coal imports experienced year-on-year declines for three months, with March and April down 28% and 29%, respectively.
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Domestic coal production: Coal production from CIL, the largest producer, increased 9.5% year-on-year for the first quarter of 2020.
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Power generation: Thermal power generation fell 1.5% year-on-year in the first quarter of 2020 and total power generation was down 32% year-on-year in April.
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Steel output: From January to April, output was down 20% year-on-year, with April declining 65% year-on-year.
Unlike China, where January to April 2020 coal imports rose, Indian coal imports for the same period were down 18% year-on-year. India’s coal imports have recorded year-on-year declines since February as COIVD-19 disrupted consumption and even the logistics of coal. This is despite average monthly coal benchmark prices falling at least 29% year-on-year over the same period.
According to media reports, CIL’s first quarter of 2020coal production increased 9.5% year-on-year. Although this slowed down to a daily rate of 1.3mt for the first 22 days of April, down 11% year-on-year, these strong gains are bad news for coal exporters to India. The Indian Government has announced measures that are similar to the Chinese Government’s coal import quota. In May, CIL was mandated to replace 100mt (40% of CY2019 coal imports) with domestic non-coking coal for the 2020–21 fiscal year.
For the period January to April2020, India’s total power output was down 7.4% year-on-year and its first quarter 2020 thermal power output was down 1.5% year-on-year. We note that total power output recorded an 8.2% year-on-year decline for March and thermal power output fell 12.9% year-on-year. In April, total power output was down 32.4% year-on-year. Data for thermal power output is not yet available but should also be significantly down, in line with total power output.
These falls would be consistent with the year-on-year decline in coal imports since February and the build-up of stockpiles at CIL and power plants.
India’s steel output acts as an indicator of economic activity. Between January and April, February was the only month that recorded a year-on-year rise in steel output, a modest 1.5%. Steel output recorded year-on-year declines of 13.8% in March and 65.2% in April, due to the full month of lockdown that started on 25 March. Against the backdrop of an increase in domestic coal production in the first quarter of 2020, a build-up of coal stockpiles and a fall in power generation, this level of economic activity presents significant downside risks to India coal imports.
The Indian Government has adopted a policy that supports its domestic coal sector, calling for import reductions. In May 2020, CIL was mandated to replace 100mt of coal (40% of CY 2019 coal imports) with domestic non-coking coal for the 2020–21 fiscal year. CIL’s first quarter 2020 output grew 9.5% year-on-year, presenting a significant risk to Indian coal imports. The risk is greater for Indonesia, because it exports mainly thermal coal. We believe India may have to continue importing coking coal for steel making because its domestic producers mainly supply thermal coal. Industry observers have estimated a 20% year-on-year decline in India’s coal imports. We agree, but also warn that there is a risk of a larger fall.
About IEEFA
The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. www.ieefa.org
About the Author Ghee Peh
Financial Analyst
Ghee Peh has worked in investment research since 1995, including at Jefferies, BNP Paribas, and UBS. He has covered Asian coal, cement and metal companies.
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Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
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- Iligan Light & Power Inc, Philippines
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- Billiton Holdings Pty Ltd - Australia
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- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
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- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
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- Planning Commission, India
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- Indika Energy - Indonesia
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- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
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- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
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- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
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- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Minerals Council of Australia
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
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- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
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- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Trasteel International SA, Italy
- Videocon Industries ltd - India
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- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
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