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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, 01 August 20
SHIP SHAPE - OUCH: FIS
Thursday afternoon saw a report that US GDP in Q2 shrank by 32.9%. Now this may have beaten expectations, but it’s a bit like saying that you ...
Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
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- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Parliament of New Zealand
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
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