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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, 08 May 20
THE COLLAPSE OF THE OIL AND BUNKER FUEL MARKETS IN EARLY 2020 - PETER SAND
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipp ...
Friday, 08 May 20
LNG DEMAND FACED SEVERAL HEADWINDS IN THE FIRST QUARTER OF 2020 - GASLOG
LNG demand faced several headwinds in the first quarter of 2020 including a warmer than average winter in the northern hemisphere, high inventory l ...
Thursday, 07 May 20
IEEFA UPDATE: THE OUTLOOK FOR THERMAL COAL IN SOUTHEAST ASIA AND SOUTH ASIA
Seven headwinds are building to sustained growth in coal in Asia
The medium term outlook for thermal coal in Southeast Asia is posit ...
Thursday, 07 May 20
IMO 2020: BUNKER CLAIMS HANDLING GUIDE FOR A NEW DECADE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
IMO 2020 is the term generally used to describe the following regulations under Annex VI of the International Convention ...
Thursday, 07 May 20
CRUDE OIL TANKER EARNINGS DROP 68% IN NINE DAYS - BIMCO
Crude oil tanker earnings have come down sharply in recent weeks with Very Large Crude Carrier (VLCC) earnings from the Middle East Gulf to China d ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
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- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
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- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
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- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
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- Minerals Council of Australia
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- MS Steel International - UAE
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- New Zealand Coal & Carbon
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- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
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- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
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- The University of Queensland
- Essar Steel Hazira Ltd - India
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- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
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- Goldman Sachs - Singapore
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- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
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- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Planning Commission, India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
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- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
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- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
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- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
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- Global Green Power PLC Corporation, Philippines
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- Price Waterhouse Coopers - Russia
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