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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, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the com ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
Wednesday, 27 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.94 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.03 points Monday, up 0.94 percent week on week.
The index, released by China ...
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- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
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- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
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- GMR Energy Limited - India
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- Orica Australia Pty. Ltd.
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- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Economic Council, Georgia
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- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
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- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
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- Ministry of Transport, Egypt
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- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
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- Star Paper Mills Limited - India
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- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
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- OPG Power Generation Pvt Ltd - India
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- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
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- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
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- Salva Resources Pvt Ltd - India
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- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Wilmar Investment Holdings
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- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
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- ICICI Bank Limited - India
- PTC India Limited - India
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- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
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- Dalmia Cement Bharat India
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
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- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
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- Renaissance Capital - South Africa
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- The Treasury - Australian Government
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- Metalloyd Limited - United Kingdom
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- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
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- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
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- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
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- The University of Queensland
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- Independent Power Producers Association of India
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- Wood Mackenzie - Singapore
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- Minerals Council of Australia
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- PowerSource Philippines DevCo
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- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
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- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
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- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
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