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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, 10 July 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 ...
Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weaknes ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
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- IHS Mccloskey Coal Group - USA
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- Orica Mining Services - Indonesia
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- Electricity Authority, New Zealand
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- Neyveli Lignite Corporation Ltd, - India
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- Energy Link Ltd, New Zealand
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- Minerals Council of Australia
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- Ceylon Electricity Board - Sri Lanka
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- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
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- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
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- Xindia Steels Limited - India
- Energy Development Corp, Philippines
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- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
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- Eastern Energy - Thailand
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- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
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- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
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- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
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- White Energy Company Limited
- Chamber of Mines of South Africa
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- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
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- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
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- Indian Energy Exchange, India
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- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
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- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
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- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
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- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
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- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
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- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
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- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
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- MS Steel International - UAE
- Australian Coal Association
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- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
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- Carbofer General Trading SA - India
- Planning Commission, India
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