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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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Wednesday, 09 September 20
MARKET INSIGHT - INTERMODAL
The uneventful summer lull which is coming to an end soon has left its stigma on the newbuilding market, which has already been devastated by the g ...
Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- Karaikal Port Pvt Ltd - India
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- The University of Queensland
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- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
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- Holcim Trading Pte Ltd - Singapore
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- New Zealand Coal & Carbon
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
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- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
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- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
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- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
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- CNBM International Corporation - China
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- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
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- India Bulls Power Limited - India
- White Energy Company Limited
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- Therma Luzon, Inc, Philippines
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- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
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- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
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- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
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- IEA Clean Coal Centre - UK
- Planning Commission, India
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- Economic Council, Georgia
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- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
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- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
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- Renaissance Capital - South Africa
- PTC India Limited - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Maharashtra Electricity Regulatory Commission - India
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