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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, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- Holcim Trading Pte Ltd - Singapore
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- Minerals Council of Australia
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- White Energy Company Limited
- Economic Council, Georgia
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- Gujarat Electricity Regulatory Commission - India
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- Thiess Contractors Indonesia
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- Medco Energi Mining Internasional
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
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- Semirara Mining Corp, Philippines
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- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
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- Planning Commission, India
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- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
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- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
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- Central Electricity Authority - India
- Larsen & Toubro Limited - India
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- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
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- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
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- SMC Global Power, Philippines
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- PowerSource Philippines DevCo
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- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
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- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
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- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
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- South Luzon Thermal Energy Corporation
- The University of Queensland
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
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- Indonesian Coal Mining Association
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- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
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- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Romanian Commodities Exchange
- Parry Sugars Refinery, India
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- IHS Mccloskey Coal Group - USA
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