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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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- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Parliament of New Zealand
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- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
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- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
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- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Australian Coal Association
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
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- Chamber of Mines of South Africa
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