Domestic

India plans deep cut in thermal coal imports in coming years

India plans to significantly reduce its thermal coal imports in “the next few years” to save foreign exchange and create jobs through the development of existing and new coal blocks, a senior official in the federal coal ministry said. Coal is among the top five commodities imported by India, the world’s largest consumer, importer and producer of the fuel after China. India spent 1.58 trillion rupees ($21.28 billion) on importing 247 million tonnes of coal, including 197 million tonnes of thermal grade, in the fiscal year to March 2020, M. Nagaraju, a joint secretary in the coal ministry, told a seminar. “As per our assessment, we can actually substitute between 110-120 million tonnes of coal. We will not be able to do this year, but certainly we will do in the next few years,” Nagaraju said, without giving more detail on the timeframe. He said increasing local coal production would help to improve the economies of states in central India, where most coal mines are located. Domestic coal demand may be subdued in Q2 on lower demand: Report

Demand for domestic coal is likely to be subdued in the second quarter of the current financial year, due to lower demand from end-user industries amid the COVID-19 pandemic along with high inventory at power stations, according to a report by India Ratings. The rating agency said domestic coal production remained subdued for the third consecutive month in June 2020 year-on-year as well as month-on-month due to low power demand and higher inventory at power stations. Thus, the coal offtake reduced in June 2020 year-on-year but improved month-on-month with the gradual relaxation in lockdown norms,

the agency said. "Despite gradual relaxation in lockdown norms, demand over the second quarter of FY21 shall be further dampened by the onset of the monsoon season. Overall, domestic coal imports are also likely to be lower in Q2 FY21 year-on-year," it said. According to IndRa, domestic coal imports are likely to have been lower in July 2020 due to the low domestic demand from end-user industries amid the COVID-19 outbreak.

. Commercial mining: UN secretary general expresses concern over ongoing coal auctions

Expressing his concerns about the “continued support for fossil fuels in so many places around the world”, Guterres said that “we have seen countries doubling down on domestic coal and opening up coal auctions”. After the government recently launched the maiden auction for 40 coal blocks for commercial mining, Antonio Guterres, secretary general of the United Nations, said that such a “strategy will only lead to further economic contraction and damaging health consequences”. While delivering the 19th Darbari Seth Memorial Lecture organised by Teri, Guterres said, “In India, 50% of coal capacities will be uncompetitive in 2022, reaching 85% by 2025.” He added that “the coal business is going up in smoke”. Expressing his concerns about the “continued support for fossil fuels in so many places around the world”, Guterres said that “we have seen countries doubling down on domestic coal and opening up coal auctions”. The government has recently amended several rules to make the coal mines more attractive for private players in the upcoming auctions, and has offered some blocks falling in areas which had been earlier designated as ‘no-go zones’. This would also be the first set of coal assets to be auctioned off for selling the fuel in the open market. The government estimates that the country will need 892 million tonne of the fuel in FY30 — around 40% higher than current levels —

Mines ministry comes out with reform proposals

The mines ministry has come out with a slew of reforms proposals, including amending the contentious provisions of 10A(2)(b) and 10A (2)(C) of the Mines and Minerals (Development and Regulation) Act, to pave the way for auctioning of around 500 potential leases stuck in legacy issues now. Section 10A(2)(b) deals with leases where reconnaissance permit or prospecting licence were granted; while 10A(2)(c) relates to grant of mining leases (ML). The mines ministry has sought comments from the stakeholders on these proposals till September 3. “These (blocks) can neither be granted because the time period to grant them is already over, nor can they be brought to auction because of legal impasse. These cases coming under section 10A (2)(c) of the Act which stood extinguished in January 12, 2017, as per the law, but are still litigated or pursued unnecessarily at various level, need to be brought to a closure to end the policy stalemate,” the ministry said in its proposal. The cases coming under Section 10A (2)(b) of the Act are still disputed in the absence of a specific sun set clause in the Act, and they have not reached closure till date. Section 7 of the MMDR Act provides for maximum period of five years for completing the prospecting operations. These amendments came in effect on January 12, 2015, and the maximum period of five year for prospecting has also lapsed on January 12, 2020.

. Coal India to create additional board level post to push business development

The board of Coal India Ltd has approved creating an additional board level post in the PSU and its subsidiaries.

According to a Coal India report, the post of Director (Business Development) will be created to identify and develop new business opportunities. "The board of directors...had approved creation of board level post of Director (Business Development) in CIL (Coal India) and its subsidiaries as per Companies Act, 2013, Listing Regulations and DPE guideline," the world's largest coal miner said in its latest report. The business scenario in which CIL operates is rapidly changing globally in the current times. To cater to futuristic business models, there is a need for an additional board level post that can drive the company's future business, increase its revenue, identify and develop new business opportunities, build and expand the presence of the company both locally as well as in the global markets, it said. All the said tasks are strategic in nature and it can be managed only by a separate board level post to lead the organisation, as all other board level posts basically meet the existing functional needs of the organisation

Coal India seeks 15% concession from Railways for coal transportation

State-owned CIL said it has sought 15 per cent distance-based freight concession from Indian Railways for transportation of domestic coal to customers located at a distance of 701 to 1,400 km from its mines. The move is aimed at broadening the client base and bring in more customers under import substitution plans, Coal India Ltd (CIL) said in a statement. "Extension of freight concession also to customers located in 701 to 1,400 Km could result in substantial domestic coal lifted by them in place of coal sourced from abroad due to lesser cost in coal conveyance," a senior executive of the company said. Out of 126 coal-based thermal plants linked with CIL, 14 plants located over 1,400 km distance are eligible for the freight concession presently. This prompted CIL to approach the railways to seek distance-based freight concession in a bid to bring in more customers under the ambit of the import substitution scheme, the statement said. Close to 70 per cent of CIL's overall supply consists of "G9 to G13" grades of coal for which the freight price is around 40 to 45 per cent of the total landed cost at consumption point. For distance above 701 km the freight cost climbs up further. If concession in freight price is offered to customers falling in this range, it would be beneficial to coal producers to step up domestic supplies substituting imported quantities. CIL's coal would then be competitive with the landed price of imported coal and customers may opt for domestic coal.

State Bank of India plans coalloan policy before key auctions, could put 41 mines in private hands

State Bank of India is creating a policy to lend to coal miners before landmark auctions that would end decades of state monopoly on the fuel, according to a person with knowledge of the matter. Long-term offtake contracts assuring demand will be central to any lending decision, the person said, asking not to be identified before terms are finalized. The nation’s biggest bank would prefer a loan tenor closer to five years, the person added. The planned policy suggests SBI is open to providing some of the financing required to put 41 coal mines with a combined annual production capacity of 225 million tons into private hands. The giant bank has flagged concerns about the sector, and Indian banks are reining in loans to corporate borrowers as the coronavirus pandemic pressures asset quality.

RAILWAYS

Indian Railways pulls freight traffic ahead of last year level

On mission mode, Indian Railways achieved a significant milestone of pulling freight traffic ahead of last year's level despite of COVID-19 related challenges. According to a release, on August 19, the freight loading was 3.11 million tonnes which is higher than last year for the same date (2.97 million tonnes). On the day Indian Railways earned Rs. 306.1 crore from freight loading which is Rs. 5.28 crore higher than last year for the same date (300.82 crore). In the month of August till August 19 the total freight loading is 57.47 million tonnes which is higher than last year for the same period (53.65 million tonnes). The Indian Railways earned Rs. 5461.21 crore from freight loading which is Rs. 25.9 Cr. higher than last year for the same period (5435.31 crore). NFR also managed to increase it goods earnings for the month of July to Rs. 178.37 crore which is significantly higher than last year's earning of Rs 143.40 crore during the same month. It may be noted that in line with the Prime Minister's call to improve logistics in the country, Indian Railways has been making huge strides in increasing the speed and volume of goods carried. The Indian Railways is going to promote Railways' freight service, making traders, businesses and suppliers aware of the benefits associated with transportation through Indian Railways.

STEEL

Steel firms set to raise prices from Sept on higher costs, global prices

Steel companies are set to increase prices from September due to rising costs and higher international prices, Jayant Acharya, director – marketing, commercial & corporate strategy at JSW Steel, said, the difference between domestic and international prices currently is about 8 per cent. “An increase in prices from September is on the cards. The amount will be decided, he added. Acharya explained that iron ore prices were at a 6-year high. “International steel prices in August, too, have increased," he said. The average FoB China for hot rolled coil (HRC) in April 2019 was $532 a tonne. At the beginning of August 2020, it was at $495 a tonne and currently is at Rs $515, indicating an increase of nearly $20 a tonne. However, the current price is yet to breach last year's April-level. The increase from September could be in the range of Rs 2,000-3,000 a tonne. While a major primary steel producer said that an increase of Rs 3,000 a tonne in steel prices was being contemplated, a secondary steel producer, said that the increase could be Rs 2,000 a tonne. In the second quarter, so far, steel prices have increased by about Rs 3,000 a tonne. Acharya said that demand was improving across the world and average sales in August were at par with pre-Covid-19 levels. However, prices were still not back to pre-Covid-19 levels of March.

India's crude steel output falls over 24 pc in July, global production shrinks 2.5 pc: worldsteel

India's crude steel output fell 24.6 per cent to 7.150 million tonnes (MT) during July 2020, according to global body worldsteel. The country had produced 9.485 MT crude steel during the same month in 2019, World Steel Association (worldsteel) said in its latest report. Global steel production also registered a fall during the month under review, the data showed. "World crude steel production for the 64 countries reporting to the worldsteel was 152.694 MT in July 2020, a 2.5 per cent decrease compared to 156.679 MT in July 2019.

"Due to the ongoing difficulties presented by the COVID-19 pandemic, many of this month's figures are estimates that may be revised with next month's production update," it said. According to worldsteel data, China registered a 9.1 per cent year-on-year growth in its steel output at 93.359 MT during July 2020.

Help govt in providing low-cost homes for migrants: Pradhan to steel firms

The Minister of Steel & Petroleum and Natural Gas Dharmendra Pradhan has appealed to steel industry leaders to partner the central government in providing low-cost housing for migrant labourers. The Covid-19-induced nationwide lockdowns have highlighted the poor housing arrangement for migrant labourers in urban regions, he said. He said the government has set a target of providing 100,000 such houses, but the industry should build many more steel-intensive, lowcost houses, which will be a model for others to emulate. Speaking at a webinar organised by the Ministry of Steel in association with the Confederation of Indian Industry on Atmanirbhar Bharat: Fostering Steel Usage in Housing & Construction & Aviation Sector, Pradhan said lower costs will make steel more lucrative for infrastructure development. The domestic industry should focus on increasing volumes instead of excessive profiteering to boost the growth of the steel sector, he said. Pradhan further added that there is no shortage of good-quality steel products in the country, and giving priority to indigenously produced steel will help the industry become a preferred destination. Seshagiri Rao, joint managing director and group chief financial officer at Sajjan Jindal-led JSW Steel, who was at the webinar, said the government should support the steel sector in creating awareness about steel-use across sectors. While domestic steel producers have made steel lighter, stronger, and more heat resistant, he said the industry was working towards making it infection proof.

. Steelmakers hike prices by Rs 2,000 per tonne as demand improves

Indian steel sector seems to be on the road to recovery with companies increasing prices by around Rs 2,020 per tonne across all products this month on the back of better demand and rising global prices, industry officials said. This is the second hike in less than a month after companies raised the metal price by about Rs 745 per tonne in July. Jayant Acharya, commercial and marketing director at JSW Steel attributed it to “a combination of global price hike, supply correction that has happened overall in the system, and a pentup demand as several segments are trying to make up for the lost quarters”. V R Sharma, managing director of Jindal Steel & Power, said, “In June the demand was very low and there were no margins, thus the price hike is well absorbed.” State-run Steel Authority of India said its bookings remain strong even after the recent price hike. Domestic steel prices are following the international price trajectory that saw a strong recovery on increasing demand from China, said Anil Kumar Chaudhary, chairman of SAIL. Domestic demand is also on the rise.

Chhattisgarh CM urges PM to reconsider Nagarnar steel plant privatisation

Chhattisgarh Chief Minister Bhupesh Baghel has written to Prime Minister Narendra Modi, urging him to revisit decision on privatisation of NMDC's under-construction steel plant in Nagarnar, Bastar.

In a letter to the prime minister, Baghel said the privatisation move will deeply hurt the expectations of lakhs of tribals and Naxalites might take undue advantage of the situation. The country's largest iron ore miner NMDC, under the Ministry of Steel, is setting up its first steel plant with a capacity of 3 million tonnes per annum (MTPA) in Nagarnar. The plant was in the list of public sector enterprises lined up by the Department of Investment and Public Asset Management (DIPAM) for strategic divestment. However, the proposal for strategic divestment of the steel plant was later deferred by an InterMinisterial Group for Divestment until the unit becomes operational.

CEMENT

Cement demand to surge on the back of strong recovery from the rural segment, say analysts

Higher agricultural income, a better-than-expected monsoon and pick up in the affordable housing segment will lead to a surge in India’s cement demand in the rural segment, analysts said. Rural demand is likely to help contain the onyear drop in cement sales volume to 12-14% this fiscal as against an average annual growth of 6% during the last three fiscals, said analysts from rating agency Crisil in a sector research report. “Demand recovery, however, has not been uniform across regions and bears a likeness to the intensity of the pandemic – East and Central regions are more resilient, while West and South are more impacted,”said, Crisil Research’s Director Isha Chaudhary. Data shows a a V-shaped recovery in the cement sector from a sharp contraction of 85% seen in April to an estimated 7-10% growth by the fourth quarter. Rural demand will also ride on a sharp rise in spending under the Mahatma Gandhi National Rural Employment Guarantee Act to engage migrant workers who have returned home following the Covid-19 pandemic.

UltraTech Cement expects subdued performance as economy slows down

Leading cement maker UltraTech Cement expects a "subdued performance" in the wake of weak real estate and overall slowdown in the economy coupled with the impact of the coronavirus pandemic, according the company's annual report for 2019-20. The nationwide lockdown, amid the coronavirus outbreak, will have a significant near-term impact on the cement industry, however, the Aditya Birla Group firm is "confident of its ability to weather the storm" and come out stronger given its healthy credit profile. Besides, the company also expects "significant near-term impact" on the cement industry on account of the nationwide lockdown, amid the coronavirus outbreak, which disrupted the production, market and supply chain. "Increase in government spends on health and public welfare; weak real estate and an overall slowdown in the economy is expected to reflect in a subdued performance of your company in the current financial year. Nonetheless, given your company's healthy credit profile, it is confident of its ability to weather the storm and come out stronger, said UltraTech Cement in the Directors' Report and Management Discussion and Analysis'. According to the company - with anticipated pick-up in private investment, financial sector reforms, resolution of stressed assets under IBC and positive interventions by the government, the outlook for fiscal 2020-21 was seen to remain largely positive.

GLOBAL

Indonesia targets 609 MT coal output in 2021

Indonesia's government is targeting coal output of 609 million tonnes in 2021, up from this year's output target of 550 million tonnes, a senior energy ministry official told parliament. Next year, the government is also targeting 441 million tonnes of coal exports, Ridwan Djamaluddin, director general of coal and minerals at the Energy and Mineral Resources Ministry said. The energy minister ArifinTasrif in June said output in 2020 will likely be below target due to low demand.

Indonesia sets August HBA thermal coal price at $50.34/mt, down 30.7% on year

Indonesia's Ministry of Energy and Mineral Resources set its August thermal coal reference price -- also known as Harga Batubara Acuan, or HBA -- at $50.34/mt, down 3.5% on month and 30.7% on the year. Receive daily email alerts, subscriber notes & personalize your experience. The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR

assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR). "The coronavirus pandemic has reduced some imported coal demand, while stockpiles remained high, with China and India prioritizing domestic coal procurements rather than making seaborne purchases," according to a ministry spokesman.

China delays import licences for Australian coal

China's commerce ministry has delayed issuing import licences for Australian coal and iron ore amid worsening trade relations between the two countries, although the move is likely to have only a limited impact on thermal coal because of reduced Chinese demand.

The issuing of import licences for Australian coal and iron ore now takes 11 days compared with one or two days previously, market participants told Argus. But the impact on Chinese demand for Australian coal is likely to be limited, at least for the rest of this year, because the market is already muted because of expiring import quotas and delayed customs clearances for Australian coal. An east China-based state-controlled utility and importer of Australian coal said that it has almost used up its entire import quota for all of 2020. The company plans to postpone any remaining cargoes that it had previously bought through term contracts with Australian producers once its quota expires. Even without the quota issue, the delayed licensing is unlikely to significantly affect China's imports of Australian coal. Importers can apply for the licences when vessels start to load at Australian ports. As the sailing time is around two weeks, licences should be granted before cargoes arrive at Chinese ports.

Germany launches first auction of coal-exit compensation payments

Coal power generation in Germany is coming to an end,” said JochenHomann. The president of federal network agency the Bundesnetzagentur made the statement while announcing the first auction to determine compensation payments to coal plant operators under pending legislation designed to drive a national exit from the polluting fuel. The agency said 4 GW of coal-fired generation capacity would be decommissioned as a result of the tender, which has a bidding date of September 1. Under the auction rules, the owners of hard coal plants and small-scale, brown-coalfired power sites will bid a sum per megawatthour of electricity generated by their facilities which reflects a compensation payment they will accept in return for not burning the fossil fuel.

Carbon savings

The Bundesnetzagentur – which has excluded southern German facilities from the first round of the tender program to focus on more damaging hard coal plants – will also consider CO2 emission benefits from each bidding plant in the event of over-subscription of the tender. Coal plant operators who lodge successful bids will receive a one-off payment of the amount of their bid multiplied by the historic production level of their facilities.

Tender rounds

The law would enact several bidding rounds up to 2027 with all hard coal plants eligible to take part, together with small brown-coal plants, with a generation capacity of up to 150 MW. The Bundesnetzagentur’sHomann said: “The tenders create an incentive to quickly remove the most climate-damaging hard coal power

plants. At the same time, security of [energy] supply remains guaranteed.”

Coal-dependent Eskom calls for battery-power storage

South Africa’s state-owned power utility, which relies on coal to generate most of the nation’s electricity, issued a request for bids to build its first battery-energy storage system, according to a tender document seen by Bloomberg. Eskom Holdings SOC Ltd. has received funding from institutions including the World Bank and African Development Bank, which it will use for the project, the utility said in a request for bids issued July 31. The funding will include design and construction of the system at the Sere Wind Farm Facility in Western Cape province. South Africa has plans to diversify its energy mix in a move away from coal, which is used for about 85% of the country’s power generation. Eskom is specifically considering green funding to offset debt and to re-purpose coal plants. Battery storage can save fuel costs and reduce grid congestion, according to the International Renewable Energy Agency. It can also balance a greater use of renewable sources that provide intermittent power. The bids will close Sept. 11, according to the documents. The request refers to the Eskom Investment Support Project and Eskom Renewables Support Project.

South Africa sees worst power cuts on record in 2020, research shows

South Africa has endured its worst power cuts on record this year, research by the country’s national science council showed. The power cuts by ailing state utility Eskom are one of the biggest challenges facing President Cyril Ramaphosa as he tries to revive investor confidence in Africa’s most industrialised economy. Analysis by South Africa’s Council for Scientific and Industrial Research (CSIR) found that 1,498 Gigawatt hours (GWh) of energy had been shed so far in the first eight months of 2020, more than 1,352 GWh in the whole of last year and 1,325 GWh in 2015, the previous two worst years on record. The CSIR estimates planned power cuts, known locally as load-shedding, cost the economy up to 120 billion rand ($7.2 billion) last year. Eskom generates more than 90% of South Africa’s power but has struggled to meet demand for years because of faults at its coal-fired power stations. Some of these stations have not been properly maintained and two new ones have been hobbled by design flaws. Ramaphosa has promised to break up Eskom to make it more efficient and has granted it a series of mammoth bailouts to stabilise its finances, but its problems have persisted. Eskom last implemented planned power cuts last week

Whitehaven profit slumps 95% as Australia's coal prices collapse

Whitehaven, one of Australia's largest coal miners, has seen its profits nearly wiped out as coal prices collapse around the world. Following a record-breaking result a year earlier, Whitehaven's earnings have crashed 95 per cent from $564.9 million to $30 million in the year to June 30, causing investors to flee. Whitehaven's shares tumbled 18 per cent to finish the day at $1.02, its lowest level in several years.

A growing number of global fund managers are pledging to exit their investments in thermal coal.

The profit crash comes as the virus-driven economic downturn weighs on global energy demand and prices of coal, one of Australia's largest export commodity exports. The benchmark price for top-quality New South Wales thermal coal exports has fallen from $US68 a tonne to $US55 in the June quarter, well below the yearly average of nearly $US100 a tonne in the 2019 financial year. Whitehaven chief executive Paul Flynn said he was seeing "signs of life" in the export market and believed the worst of the price falls could be over for metallurgical coal – the coal used in steelmaking – but he could not predict how much longer the price pressure would last. "The crystal ball is a little foggy in that regard," he said. "And no matter how much you'd like to polish it, I think it's not going to be any clearer in the short term."

Although Whitehaven itself does not sell coal into China, Mr Flynn said the thermal coal market was being affected by Chinese government policies to avoid Australian coal.

South32 to lift 2020-21 Australian coking coal output

Australian mining firm South32 plan to produce 6.4mn t of metallurgical coal from its mines in the Illawarra region of New South Wales in the 2020-21 fiscal year to 30 June before easing back to 6.3mn t in 2021-22, which are up from the 5.55mn t produced in 2019-20. Operating costs at Illawarra are forecast to fall to $84/t in 2020-21 from $93/t in 2019-20, which are down from $142/t in 2017-18. The firm also expects sustaining capital expenditure to fall to $150mn in 2020-21 from $185mn in 2019-20 as underground mine development drops following substantial investment previously. Thermal coal production from the Illawarra mines is forecast to drop to 1.3mn t in 2020-21 and to 1mn t in 2021-22, down from 1.46mn t in 2019-20. South32 plans to lift metallurgical coal production from the Illawarra mines to 7.6mn t/yr beyond 2021-22

Coking coal prices may rise slowly after breaching marginal costs: sources

All signs point to coking coal prices moving up, at least eventually, according to coal market executives and analysts. Receive daily email alerts, subscriber notes & personalize your experience. Met coal demand is recovering, especially in India, and some Australian and US supply has fallen this year, leaving the market in better shape as benchmark prices fell below marginal cost. The Platts TSI Premium HCC price settled around their lows at $107/mt FOB Australia this week, averaging just below $133/mt FOB for the year to date, and compared with $157.30/mt a year earlier. Bank of America this month revised down hard coking prices for 2020 to $126/mt FOB, from $129/mt. This would imply imply prices for the rest of the year averaging around $115.75/mt, based on S&P Global Platts calculations.

Met coal prices are "geared to world-outsideChina steel production," and affected by soft demand, Bank of America said, noting expectations for a recovery in demand in the medium term.

The latest BHP spot trade this week pricing Peak Downs premium coal at just below $109/ mt FOB Hay Point may reflect the seaborne market is still searching for a bottom, ahead of

a stronger global economic recovery, a coal mining executive said. US miner Warrior Met coal said in a quarterly report Aug. 5 that it may be "premature to forecast when the economies of the countries in which its customers are located will reopen on a sustained basis and lead to a return to more normalized demand for met coal." Global miner Peabody Energy's CEO Glenn Kellow during an Aug. 5 call with analysts highlighted uncertainty persisting in the met coal market and tough conditions for miners. Peabody cited low demand and volumes in the second quarter translating into high unit met coal costs, above current spot prices.

Sri Lanka imposes daily electricity cuts after nation-wide power outage

Sri Lanka's electricity board decided to impose one-hour power cut daily for a period of four days to meet the shortfall caused by the breakdown of a major power plant that led to a nationwide power outage. A massive power outage hit Sri Lanka, plunging the entire country into darkness for around seven hours and disrupting essential services and businesses following a technical failure at Chinese built Norochcholai coal power plant in the north western region. The state power entity Ceylon Electricity Board (CEB) said power cuts have been introduced as a measure to meet the shortfall caused by the breakdown of the coal power station. "We are short of about 300 mega watts and to meet this shortage there will be power cuts lasting for an hour from 6 pm till 10 pm based on 4 zones", VijithaHerath the chief of the CEB told reporters. The Norochcholai coal power plant is currently off-grid due to a rise in the temperature and requires to be reset after the temperature drops to the assigned level, he said.

Petroleum coke price strength bolsters demand for coal

Firmness in global petroleum coke prices has bolstered industrial demand for seaborne coal in Asia-Pacific, and the trend could expand to other regions should coal continue to hold competitiveness. The two fuels typically compete for industrial users, mainly cement makers, but also in other sectors such as iron and steel.

But the fundamentals of each commodity have moved in opposite directions, working to coal's advantage. Coal supplies remain abundant amid high stocks, and as supply could not adjust to the weaker demand environment in the second quarter because of the Covid-19 slowdown. Conversely, coke availability has tightened significantly over the same period because of lower runs at refineries. Refineries in the US — the world's largest producer and exporter of coke — have been running at 70-75pc utilisation rates even after demand for crude and products started to gradually recover in the second quarter, and are expected to remain at similar levels for at least a few more months. This has significantly reduced spot coke availability in the market, lifting the US Gulf coast 6.5pc fob coke price to one-year highs. One refiner estimates that there is 300,000- 350,000t of coker feed out of the US market at current utilisation rates, which translates to a 15,000t/d decrease in coke production, or 450,000t less output per month — equivalent to nine or 10 standard cargoes. And as spot coke availability remains tight, refiners report buying interest at least four to five times higher than cargo availability. This is primarily demand from users with less flexibility to switch fuels. Further on the upside, a sharp rise in freight rates has supported delivered coke prices to key consuming regions, namely Asia-Pacific, the Mediterranean and Latin America.