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Monday, 29 June 20
CHINA COAL IMPORT OUTLOOK: MANY MOVING PARTS, FORECAST TO FALL 10% YOY - GHEE PEH | IEEFA
 China’s coal demand declined in the first quarter of 2020. According to the China National Coal Association, the country consumed 870mt in the first quarter of 2020, down 6.8%year-on-year. The power sector’s coal consumption fell 6.8%year-on-yearto 507mt,while construction sector usage fell 24.7% year-on-year to 65mt. Although the coal market remains volatile, industry observers estimate an average decline of 8% to 12% year-on-year in China’s coal demand. IEEFA currently estimates a 10% year-on-year fall in China’s 2020 coal imports, based on the following four key variables:
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Coal imports: From January to April2020,imports rose 27%year-on-year, but we note this is a function of lower prices.
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Domestic coal production: After declining year-on-year in January and February, output in March and April rose 6.4%and 6.0%year-on-year, respectively.
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Power generation: Thermal power generation declined 8.2%year-on-yearin the first quarter but rose 1.5%year-on-yearin April.
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Steel output: This increased 1.3%year-on-yearfor the first four months of 2020.
A detailed examination of China’s data, together with press commentary on the Chinese Government’s policy on coal imports, reinforces our view that caution is merited. According to media reports, China’s coal imports grew 22% year-on-year in April, and January to April 2020 imports increased 27% year-on-year, but the growth was boosted by lower prices for coal imports from Indonesia and Australia. The average April Newcastle benchmark price of US$56.2/tonne is 35% lower year-on-year.
According to media reports, China’s coal production experienced year-on-year growth of 6.4% in March and 6.0% in April. This growth is unsurprising as the National Energy Administration announced that China’s production had reached 83.4% of total coal mining capacity as of 3 March. The COVID-19-related disruption to China’s domestic coal output appears limited to January–February2020,when output declined 4.8%year-on-year, which is bad news for coal exporters to China. Additionally, 12 Chinese coal companies have called for a 10% cut in output from current levels to support domestic prices. The year-on-year growth in China’s domestic coal production would also tie in with government policy to impose an import quota this year that is set at 2017 levels, which are 10% below 2019 levels.
From January to April 2020, total Chinese power output fell 4.7% year-on-year, while thermal power output fell 5.9% year-on-year. In April, total power output grew 2.0% year-on-year, and thermal power output was up 1.5% year-on-year. From January to April 2020, 87 % of China’s thermal power capacity was from coal-fired plants, with the remainder from gas-fired facilities, according to the China Electricity Council. We note that even with the slight uptick in thermal power output for April, it is too early to suggest a sustained recovery in coal usage and imports.
China’s steel output serves as an indicator of economic activity. It rose1.3%year-on-yearfor January to April2020, indicating some stability. According to Mysteel Global, blast furnace capacity utilization rates at 163 mills rose to 85.6%, the highest rate in nearly 11 months, as of 15 May. However, against the backdrop of an increase in domestic coal production, this level of economic activity would still present downside risks for Chinese coal imports.
The outlook on government policy remains negative for exports to China, thanks to the coal import quota that seeks to maintain 2020 coal imports at the 2017 level of 270mt compared with 300mt in 2019. However, according to media reports, Guangdong and Fujian provinces used up the quota in the first four months of 2020. One positive sign for Indonesia’s exporters is the suggestion in media reports that China may reduce coal imports from Australia from July because of political tensions. Meanwhile, China’s coal producers have also been calling for government help. The China Coal Transportation and Distribution Association (the state-run representative body for domestic miners) has asked the National Development and Reform Commission to help restrict imports of cheap fuel. Additionally, 12Chinese coal producers have called for a 10% reduction in domestic coal output. Industry observers have estimated a year-on-year decline of 8–12%for China coal imports. This is in line with IEEFA’s conclusion that Chinese coal imports could decline 10%year-on-yearin 2020.
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, 01 July 20
COLOMBIA'S COAL EXPORT VOLUMES HAVE STEADILY DECLINED IN RECENT YEARS - BANCHERO COSTA
Colombia is the world’s fifth largest seaborne exporter of coal, coming after Australia, Indonesia, Russia and the USA.
Export ...
Wednesday, 01 July 20
MARKET INSIGHT - INTERMODAL
It was beginning of 2020 – close to 6 months from now – when we first experienced the huge impact of the COVID 19 outbreak on Ship Repa ...
Monday, 29 June 20
INDONESIAN COAL AT THE MERCY OF THE DRAGON AND TIGER - GHEE PEH | IEEFA
Coal sector analysts have been busy in recent months mapping the negative impact of low coal prices from the COVID-19 pandemic on Indonesian coal c ...
Monday, 29 June 20
FALLING DEMAND IN CHINA AND INDIA SIGNAL TOUGH TIMES AHEAD FOR INDONESIAN EXPORTS - GHEE PEH | EEFA
Assessing the Impact on Indonesian Coal Companies
The bad news for Indonesia’s coal companies is that they are likely to have ...
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 ...
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- Madhucon Powers Ltd - India
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- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
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- Economic Council, Georgia
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- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
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- Ministry of Mines - Canada
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- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
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- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
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- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Planning Commission, India
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
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- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
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- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
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- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- The University of Queensland
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- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
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- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
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- Indian Energy Exchange, India
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- Baramulti Group, Indonesia
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- Indian Oil Corporation Limited
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- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
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