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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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Monday, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
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- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Australian Coal Association
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Planning Commission, India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
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