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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, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
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- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- The University of Queensland
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
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