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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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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Mintek Dendrill Indonesia
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- Global Business Power Corporation, Philippines
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- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
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- Electricity Authority, New Zealand
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- IEA Clean Coal Centre - UK
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- Directorate General of MIneral and Coal - Indonesia
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- San Jose City I Power Corp, Philippines
- The University of Queensland
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- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
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- Intertek Mineral Services - Indonesia
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- Straits Asia Resources Limited - Singapore
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- Trasteel International SA, Italy
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- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
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- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
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- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
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- Australian Coal Association
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
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- Wood Mackenzie - Singapore
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- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
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- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Wilmar Investment Holdings
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- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
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- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
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- Barasentosa Lestari - Indonesia
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- Bhatia International Limited - India
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- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
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- Goldman Sachs - Singapore
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- International Coal Ventures Pvt Ltd - India
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