Domestic

CIL's coal quota under e-auction for non-power sector up 3-folds in Apr

State-owned Coal India's fuel allocation under the exclusive e-auction scheme for the nonpower sector rose over three-folds to 3.91 million tonnes (MT) in April. Coal India Ltd (CIL) had allocated 1.20 MT of dry fuel to the sector under the scheme in April 2019, as per latest government data. This growth comes amid CIL looking to tap the non-power sector to consume its coal in the wake of a slump in demand for the dry fuel. For the entire fiscal (2019-20), the PSU's coal allocation under the scheme dropped to 8.03 MT from 11.36 MT in the previous year.No dry fuel was allocated in March 2020, whereas in the same month of 2019, 1.93 MT of coal was booked under the scheme, data showed. CIL, which has sufficient stock coal, is grappling with a slump in demand for the dry fuel. The power sector is one of the major consumers of Coal India.

Lockdown effect: Core sector output crashes record 38.1% in April

The output of India's eight core sectors shrank by a record 38.1 per cent in April after a nine per cent contraction in March, as factories remained shut nationwide and production came to a virtual halt amid the coronavirus lockdown. The core sector contraction in April represented the worst performance in the current series, but experts say the fall was expected and would slowly give way to lower rates of contraction in coming months. The infrastructure segment experienced the biggest production shocks. Steel production tumbled by a massive 83.9 per cent after March's 24 per cent fall. Cement production shrank by an equally large margin of 86 per cent, following a 25 per cent fall in March. Both sectors have been in the grips of volatility even before the lockdown but strict social distancing norms have meant that construction activities have been suspended across the country. While it was the sole sector experiencing growth

(4 per cent) in March, coal output reduced by 15.5 per cent in April. The pace of contraction in electricity demand has narrowed to 14.9 per cent on a Year-on-Year basis in the ongoing month (till May 27, 2020) from the considerable 24 per cent in the previous month. Elsewhere in the energy space, crude oil production continued its downward spiral for the 19th straight month. However, production saw a relatively small hit in April, contracting 6.4 per cent. Production of refinery products, a key export item, fell by a major 24.2 per cent. Contraction jumped from just 0.5 per cent in March. Finally, fertiliser output has reduced by 4.5 per cent after reducing 11.9 per cent in March. Coal supply by Coal India to power sector dips 22% to 32 MT in April

State-owned Coal India's supply to the power setor has dropped 22 per cent to 31.95 million tonnes in April amid slump in the fuel demand in the country on account of Covid-19-induced lockdown. Coal India (CIL) had supplied 40.90 million tonnes (MT) of April, 2019, the coal ministry said in a report. The coal supply by state-owned Singareni Collieries Company Ltd (SCCL) to the power sector also dropped by 38.6 per cent to 2.86 MT in April, from over 4.66 MT in the year-ago period, the report said. With the power sector, a major consumer of the dry fuel, witnessing a drop in fuel consumption amid the lockdown, CIL has shifted its focus to overburden removal. The PSU removed 114.43 million cubic metres of overburden in its open cast mines in April 2020, as compared to 104.22 million cubic metres a year ago, registering an increase of 9.7 per cent. A Central Electricity Authority (CEA) report said that as on April 30, 2020, there were 50.89 MT of coal stocked up at the power houses in India, enough to last for 31 days.

Govt may launch coal blocks auction under commercial mining on Jun 11

The Centre is likely to launch the process of auctioning coal blocks for commercial mining on June 11, pickng around 50 mines for the hammer. An official on the condition of anonymity said the "government will come out with the notice inviting tender (NIT) for auction of coal mines for sale of coal on June 11." The coal ministry proposes to launch the auction of coal mines through an event in the national capital followed by a series of events in different parts of the country to create sensitisation on the amendments made in Acts and Rules by the Centre and generate private sector interest and participation, according to a government notice. The government in May approved a methodology for commercial mining of coal on revenue sharing basis. The decision was taken during a meeting of the Cabinet Committee on Economic Affairs (CCEA) under the chairmanship of Prime Minister Narendra Modi. The methodology approved by CCEA provides that bid parameter will be revenue share, the government had said adding that bidders would be required to bid for a percentage share of revenue payable to the government. Indian Thermal Coal Imports in April Shrink 30%

The Indian Ports Association, which maintains cargo data handled by these 12 ports, in its latest report said that thermal coal imports at India's 12 major ports saw a 30.5 per cent plunge at 7.8 million tonnes in the first month of the current fiscal as compared to 11.27 million tonnes of thermal coal in the same month of 2018-19. Imports of coking and other coal too declined 17.07 per cent at 4.27 million tonnes during the month as compared to 5.15 million tonnes of coking coal in the corresponding month last fiscal. Ports like JNPT, Chennai, Cochin and Kamrajar witnessed huge decline in cargo handling.

Chennai Port saw a massive 38.17 per cent fall in cargo handling to 2.44 million tonnes and JNPT by 33.97 per cent to 3.95 million tonnes in April. Cargo handling at Cochin port slipped 33.73 per cent to 1.87 million tonnes, and Kamrajar Port 30.03 per cent to 2.08 million tonnes. Govt's commercial coal mining may halve India's import bills; can save up to Rs 45,000cr annually

The recent announcement by Finance Minister Nirmala Sitharaman to revamp coal sector by introducing commercial mining move is expected to save massive in regards to India's import bills. CRISIL says, “Government’s move to open up commercial coal mining can halve the annual expenditure incurred on importing non-coking coal because of substitution through domestic production." Sachin Gupta, Senior Director said, CRISIL Ratings, “The decision to liberalise coal mining will engender a significant substitution effect by improving the availability of coal, and help meet rising domestic demand. Around half of India’s humongous reserves – most of which are noncoking coal – has not yet been allocated for mining so the potential is substantial.” As of March 2020, India imported an estimated 180-190 million tonne (MT) of non-coking coal costing over Rs90,000cr. Once commercial mining picks up, independent thermal power plants and captive power plants can substitute their annual imports of 80-90 MT. However, 45-50 MT would continue to be imported by the thermal plants designed to operate only on such feedstock.” Overall, CRISIL expects the move to save up to Rs45,000cr worth import bills. Niti Aayog warns mines ministry against cancellation of pending claims

Niti Aayog vice-chairman Rajiv Kumar has said that any policy change without deciding on pending mining applications will have an adverse impact on investors’ confidence. As part of major reforms announced recently, the Centre is reported to be considering deletion of a provision in the Mines and Minerals (Development and Regulation) Act, 2015 that guarantees a successful explorer the right to move ahead --from a reconnaissance permit to a prospecting licence, or from a prospecting licence to a mining lease. In a recent letter to mines minister Prahlad Joshi, Kumar wrote, “Any move to delete the provisions of 10(A)2(b) without deciding these pending cases will defeat the very purpose for which these provisions were brought in when the amendment to the MMDR was introduced in 2015. Otherwise also, any such move will adversely impact investors’ confidence in policy predictability and judicious implementation of provisions of the Act in a definitive time frame." Kumar’s letter also refers to media reports to highlight the “serious repercussion such a move may cause on the investment climate of the country”. It points out that the industry has made several representations on applications saved under this provision that states and the Centre had refused to process in the last five years. Rs 50k-crore investment in coal infra

According to finance minister Nirmala Sitharaman, not just fully explored coal blocks, but even partially explored ones will now be auctioned, and 50 assets will go under the hammer soon. The move is in recognition of the fact that staterun Coal India is expected to ramp up production to 1 billion tonne by 2023-24. Going the whole hog in ushering in unrestricted commercial terms in India’s long-state-dominated coal mining business, the government has sought to buttress the policy liberalisation steps announced for the sector over the past couple of years, with a host of additional incentives for potential Indian and foreign investors. Also, early production and in situ coal gasification (syngas) and liquefaction projects will be incentivised through rebates in revenue-share. Private investors could also seek to grab Coal

Bed Methane (CBM) extraction rights for even the mines owned by public sector Coal India. Additionally, the government seeks to make/facilitate infrastructure investments to the tune of Rs 50,000 crore in the sector, to ease evacuation of coal from pitheads. The proposed investments will include `18,000 crore worth of investments in mechanised transfer of coal (conveyor belts) from mines to railway sidings, the minister said.

RAILWAYS

Derailed by lockdown, Railways sees April revenue tumble by ₹10,000 crore

The Railways registered earnings of ₹5,247.25 crore for April, the first full month after the nationwide lockdown was imposed. This was approximately ₹10,000 crore lower than the ₹15,378.45 crore seen in April 2019, Railway data show. The revenue from the freight segment stood at ₹6,016.33 crore, reflecting a 41 per cent drop against the ₹10,285.79 crore seen in the same period last fiscal.

Cargo loading hit

Though there were no curbs on rail freight movement during the lockdown, there was a drop in loading of cargo due to various reasons. “The demand for power collapsed, leading to a drop in coal production, which in turn led to a drop in coal loading,” a Railway official explained to BusinessLine. “Construction stopped, prompting a drop in demand for cement movement. Automobile makers (like Maruti and Tata Motors) did not sell any vehicle, which in turn led to a drop in demand for steel movement. And, as steel factories (including SAIL, RINL and Tata Steel) stared at unsold stocks, there was a drop in demand for iron ore movement to those factories.” “Open rakes which loaded coal did not face much difficulty in loading and unloading, as they use equipment. But there were challenges in labour availability and, even if labourers were available, there were challenges in moving labourers to goods sheds. This led to challenges in loading and unloading sacks and packets from covered wagons, which are required to move cement, fertiliser and food grain.” Shortage of Labour and Containers at Ports Leading to Fall in India’s Exports

A report by Indian Port Association revealed that country’s 12 major ports witnessed a 21% decline in cargo volumes to 47.42 million tonnes (MT) in April due to the pandemic. These include Deendayal; Mumbai, JNPT; Mormugao New Mangalore; Cochin, Chennai, Kamarajar (earlier Ennore), V O Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia). Of these, Chennai and JNPT ports saw the biggest decline of 38.17% and 33.97% in cargo handling respectively. Rating agency ICRA projects contraction of 5-8% in general cargo and 12-15% in container segment throughout 2020-21. Indian ports are facing a 50%-60% shortage in cargo containers. Import containers have not been emptied at the ports due to a shortage of labour. Consequently, the freight of containers has spiked by 32%. The India Cellular & Electronics Association stated that though it expects 30% normalcy by May end, getting labour will turn out to be a big challenge. The cargo shipment restarted in lockdown 1.0, 2.0 and 3.0. However, it again came to a halt as labourers started returning. As a result, Shipments stuck at CFS for 10-15 days due to lockdown.

STEEL

Sharp fall in Indian auto sales to hit steel demand

The automobile sector contributes to 10-12pc of India's total steel demand. In the year ending March, automobile output fell by 14.73pc on the year to 26.3mn vehicles. This includes more than 34mn passenger vehicles and 752,022 commercial vehicles. The remainder was divid

ed between two-wheelers, three-wheelers and quadricycles. Total auto sales in the same period dropped by 18pc on the year to more than 23.54mn units. In March, India's automobile sales fell to its lowest on record as a result of Covid-19 and the lockdown, declining by 33.6pc on the year to 1.44mn vehicles. Passenger vehicle sales fell by 51pc year on year to 143,014 units and commercial vehicles by 88pc year on year to 13,027 units. Automotive steel demand is expected to remain muted for the year ending March 2021 because of low income levels and consumer sentiment following on from the coronavirus. India's major automobile producers — which include Tata Motors, Maruti Suzuki, Mahindra, Hyundai, India and Nissan India — recorded zero domestic sales in April. Production at these automakers came to a standstill in April following the announcement of a nationwide lockdown on 25 March. The auto component industry is likely to witness a double-digit decline in the 2020-21 fiscal year on account of disrupted operations due to the pandemic and lockdown, according to a forecast by Mumbai-based ratings agency India Ratings and Research. Global industry research agency Crisil estimates that auto component production revenue growth will decline by 15-17pc during the financial year. In addition to dampened consumer sentiment and production cuts, lower freight demand will the limit the movement of trucks, weighing on commercial vehicle demand. India's crude steel output slips 65% to 3.13 MT in Apr: World Steel report

India's crude steel output declined over 65 per cent to 3.13 million tonnes (MT) during April, according to the World Steel Association. The government imposed a nationwide lockdown on March 25 to prevent the spread of the coronavirus pandemic which has impacted production, demand and supply of steel in India. The country had produced 9.02 MT of crude steel during the same month a year ago, the World Steel Association (worldsteel) said in a report. India had posted a 14 per cent decline in steel output at 8.65 MT in March as compared with 10.04 MT in March 2019. Global steel output also declined 13 per cent to 137.09 MT as compared with 157.67 MT in April 2019. "Due to the ongoing difficulties presented by the Covid-19 pandemic, many of this month's (April) figures are estimates that may be revised with next month's production update," the global industry body said. China, which had for the first time in many months reported a 1.7 per cent fall in its output in March at 78.97 MT, has started showing growth in production, the data showed. US produced 4.96 MT of crude steel in April, 32 per cent lower than 7.35 MT in the year-ago month. Japan registered a 23 per cent fall in crude steel production at 6.61 MT in April 2020 as against 8.64 MT in April 2019. South Korea produced 5.50 MT crude steel, down 8.4 per cent from 6 MT in April 2019. In the EU, worldsteel said, Germany estimated 3 MT of crude steel production in April 2020, down 10.7 per cent from April 2019. Italy's production was down by 30.7 per cent at 1.35 MT. Steel units to gain as NMDC reduces iron ore prices

NMDC on May 9 reduced the price of iron ore by ₹400 per tonne and that of DRCLO (directly reduced calibrated lump ore) by ₹470 per tonne. On April 4, the mining major had reduced the price of iron ore by ₹500 per tonne and DRCLO by ₹580 per tonne. In a span of one month, it has reduced the iron ore price by ₹900 per tonne and DRCLO by ₹1,050 per tonne. The main customers of DRCLO are based in Chhattisgarh. The price cuts offer a lot of relief to steel companies, especially the sponge ironbased ones of Chhattisgarh, said the firm. NMDC said it considered the current iron and steel market scenario before taking an informed decision to rationalising prices.

It may be noted that all the major steel mills are running at reduced capacity because of depleted demand for end-products. Some of the merchant miners at Odisha including OMC reduced iron ore prices by ₹500 per tonne in their recently concluded auctions and could still not dispose of the entire quantity.

CEMENT

India's cement production to fall 25-30% in FY21 as Covid-19 saps demand

Cement production in the country is slated to fall by 25-30 per cent this fiscal as Covid pandemic has sucked demand from end user industries. This is billed as the steepest fall for the industry in any year. Capacity utilisation in FY21 is seen at 40-45 per cent. Even before the onset of Covid-19, cement producers were wrestling with an economic slump. In the last fiscal, cement output fell by 0.8 per cent as against a growth of 13.3 per cent registered in FY19. The nationwide lockdown has come at the time when construction activities is at its peak and it will be followed by the monsoon season where again the construction activity will be impacted thereby affecting entire dynamics of demandsupply for cement”, said a report from CARE Ratings. Due to bleak outlook and unfavourable business conditions, cement companies are unlikely to make fresh additions to existing Capex (Capital expenditure) as demand stays muted. Besides, some of the players are likely to defer Capex spends.Flagging demand in the domestic market has unnerved cement makers as India is the world’s second-largest cement market, both in production and consumption. The Cement Manufacturers Association, India accounts for eight per cent of the world’s installed capacity. The nameplate capacity of cement manufacturers has increased at a Compounded Annual Growth Rate (CAGR) of 7.1 per cent during FY16-FY20. But prolonged rains and government-enforced nationwide lockdown shrunk the capacity utilisation rate from 70 per cent in FY19 to 61 per cent in FY20. Cement firms pin hopes on rural demand revival

Indian cement companies anticipate revival of demand in the rural areas, paced by sales to individual home building and government-led affordable housing, even as bigger infrastructure and swanky home projects in metro cities remain suspended due to the lockdown curbs and migration of hard-hatted personnel to the hinterland. But even in the villages, there is no consistency yet in demand. Shree Cement is running at 35- 40% capacity, and is able to sell only 45-50% of their usual sales. And it’s mostly towards rural consumption. Tier-2 and -3 cities are better placed than metros with less number of cases and limited labour availability issues. In a recent sector report by Crisil, analysts pointed out that recovery in urban areas will take longer due to higher dependence on migrant workers as against rural areas, where engagement of migrant labourers is just 30% compared with 80-85% for urban regions. In a recent sector report by Crisil, analysts pointed out that recovery in urban areas will take longer due to higher dependence on migrant workers as against rural areas, where engagement of migrant labourers is just 30% compared with 80-85% for urban regions. Right after cement companies resumed operations mid-April, dealers and individuals started stocking up on cement in rural areas. However, Narwekar is doubtful if this euphoria will continue. Even for government-led projects, rural India is better. Affordable housing and NHAI projects are continuing, and the government is also building new hospitals and facilities in rural areas, a positive for cement companies.

GLOBAL

EU's greenhouse gas emissions continue to fall as coal ditched

Greenhouse gas emissions in the EU continued their fall in 2018, the latest year for which comprehensive data is available, according to a new report from Europe’s environment watchdog. Emissions fell by 2.1% compared with 2017, to a level 23% lower than in 1990, the baseline for the bloc’s emission cuts under the UN’s climate agreements. If the UK is excluded, the decline since 1990 was smaller, standing at 20.7%. The continuing fall, revealed in a report by the European Environment Agency, came as the result of EU-wide and country-specific policies, with energy generation showing the biggest decline in emissions as coal was phased out further and renewable power increased. Carbon dioxide emissions from transport flattened off in 2018, after rising for the previous four years, giving hope that this major source of emissions may be brought under control. However, emissions must be brought down much further and faster to satisfy the EU’s obligations under the Paris agreement, campaigners said. Annual falls of about 7% are estimated to be needed to keep global heating within the Paris upper limit of 2C above pre-industrial levels. The economic turmoil and disruption caused by the coronavirus is likely to result in a short-term drop in emissions, as it has so far this year across the world, but the longer-term impact is unknown.

Coal supply investment still driven by price: IEA

Price, not policy, continues to be the key driver impacting investment in coal supply infrastructure, as coal project financing grew by 15pc last year, the Paris-based IEA said in its World Energy Investment 2020 report. The agency said that coal supply investment follows typical commodity boom and bust cycles, citing Australia as an example. Changes in investment spending between 2011 and 2019 in the world's largest coal

exporter by value are closely aligned to price signals from the preceding period, whereby a decrease in the coal price results in reduced investment, and vice versa.

"On this basis, downward pressure on the coal price in 2020 is likely to be a primary factor affecting investment decisions in 2021," the IEA said. But economic signals continue to encourage investment in new coal projects, with China and India leading the way in sanctioning new infrastructure. This is because coal still represents more than a third of global electricity generation, remains the secondlargest fuel in the global energy mix after oil and is the second-largest traded bulk commodity after iron ore, the IEA said. Investment in the coal supply sector — mining and related infrastructure but not coal-fired power plants — grew by 15pc in 2019 to $90bn (€81.8bn). China was the key contributor to this growth, followed by Australia.

China's National Energy Administration and the National Development and Reform Commission approved 201mn t/yr of new coal mining capacity last year, up from 68mn t/yr in 2018 and 28mn t/yr in 2017.

South Africa’s biggest emitters to be exposed to public scrutiny

This, he said, would result in large corporates having to face public scrutiny of their air pollution data and anti-pollution plans, in addition to tax on excess carbon emission. “With two of the largest polluters accountable for 40% of South Africa’s GHG emissions alone, it’s time for businesses and individuals alike to acknowledge that the urgency of the situation requires everyone to accurately quantify, assess and reduce their contributions in order to prevent catastrophic climate change,” Zollner stated in the release to Mining Weekly. Once lockdown had been lifted, information on 16 of South Africa’s biggest polluters would be released for public examination, including information relating to their annual emissions, their plans to reduce those over five years and audited reports on target progress. This would also serve to emphasise Carbon Tax Act obligations. Failing to show that they were taking sufficient steps would, Zollner stated, result in a public outcry in addition to an increased tax burden. “While businesses might feel pressured to reassess their emissions and lower their carbon footprint, quantifying their contribution in order to determine an appropriate decarbonisation framework isn’t that difficult. “Technology solutions that monitor carbon footprint as well as showing tax liability have made it a simple matter of generating an accurate visualisation and report based on the input of emissions or process data, breaking tax liability down into its relevant emissions sources per emitter site.

The case for turning South Africa's coal fields into a renewable energy hub

South Africa is currently one of the world's largest carbon emitters. And it's increasingly being viewed as a pariah that isn't contributing as much as it could to the international fight against global warming and climate change. With a lot of other countries now moving away from fossil fuel-based electricity, there's considerable pressure for South Africa to follow. More than half of the carbon and associated greenhouse gas emissions in the country are associated with coal power production. Of the 15 large coal plants in operation, 12 are located on the plateau regions of the province of Mpumalanga in the northeast of the country. In addition to their contribution to global warming, these emissions are also recognised as a major source of air pollution and associated health risk. Satellite images have identified Mpumalanga as the region with some of the highest and most deadly nitrogen dioxide and sulphur dioxide production in the world.

Coal power plants were preferentially erected adjacent to vast coal deposits. As a result the coal-rich plateau also became South Africa’s electricity generating hub. But, as elsewhere in the world, South Africa is increasingly looking at alternative energy sources. In its most recent Integrated Resource Plan for electricity, the government has set out a power generation road-map that foresees the addition of about 20 000 MW of solar and wind farms. This amounts to 25% of the projected total power generated in South Africa in 2030.

China to Finance & Build a Massive New Coal Power Plant in Zimbabwe

The Zimbabwean government announced last month that construction of the new $3 billion Sengwa coal power plant will proceed after years of negotiation. The new 2,800 megawatt plant will be a joint effort between Zimbabwe’s Rio Energy and a consortium of Chinese state-owned enterprises led by the Wuhanbased infrastructure contracting giant China Gezhouba Group. Gezhouba will be the lead contractor and will also be responsible for raising additional capital. Separately, Power China will build a 250km water pipeline for the plant along with transmission lines. And on the financing side, the Industrial Bank of China will be involved and Sinosure is already on board to provide risk insurance. Officials say everything’s line up and ready to go which could be good news for electricity starved Zimbabwe that currently produces just over half of the 2,200 megawatts that Zimbabwe needs every day.

Australia: Coal prices find a floor as mines face outages

Coal supply from Australia is poised to dip with as many as three local mines facing outages in coming months. Confirmation from Peabody Energy and New Hope that winter disruptions were likely at three Australian mines could provide some much needed support for coal prices, which slumped dramatically during April. New Hope said its flagship Bengalla thermal coal mine in NSW would shut down in July for 80 days to enable maintenance to go ahead on a major piece of mining equipment called a dragline. Bengalla was on track to produce about 8 million tonnes of coal in the year to June 30, and a further 2.2 million tonnes of annual coal production capacity could also be idled if Peabody goes ahead with curtailment of the nearby Wambo underground mine. After slumping 27 per cent between February and early May, prices for top quality NSW thermal coal steadied in the past three weeks, and were incrementally higher on May 26 at $US51.90 per tonne. Prices for premium hard coking coal slumped 30 per cent between February and May as pandemic lockdowns crimped demand, but prices have been steady between $US113 per tonne and $US120 per tonne for the past three weeks.

Renewable energy eats into coal's share of electricity grid in Australia

Australia's reliance on coal-fired electricity is waning as new figures reveal renewable energy now accounts for more than 20 per cent of the nation's power, passing a new record. While coal and gas-fired power remain dominant in the energy mix, together accounting for 77 per cent, the latest data from the Energy Department shows renewable energy's share of total power generation has continued to surge on the back of a 46 per cent rise in solar output last year and a 19 per cent increase in wind power. Renewable energy - including wind power, hydro power, large-scale solar and rooftop solar panels - rose from a combined 19 per cent share in 2018 to 21 per cent in 2019. Gas-fired power generation increased 6 per cent, with a 21 per cent share of the energy mix. Although coal's share declined from 60 per cent to 56 per cent, Energy and Emissions Reduction Minister Angus Taylor said the figures demonstrated the "continuing importance of coal" in Australia's energy mix and also highlighted a "growing reliance on gas".

Australian coal seeks alternate markets to China

Australian coal mining firms are looking for alternate markets for their thermal and coking coals, as the threat of a trade dispute with China ramps up with the imposition of an 80.5pc tariff on imports of Australian barley. Diplomatic relations between China and Australia have been strained in recent weeks after Canberra called for an investigation into the early stages of the Covid-19 outbreak. Beijing argues that the barley tariffs are part of an anti-dumping investigation that was started prior to the emergence of the pandemic. Canberra said it will not respond to the new tariff, but the industry is concerned about a ramping up of trade tensions, particularly given reports that China is clamping down on import quotas of Australian cok

ing coal and may be planning to suspend imports of Australian thermal coal from 1 July. China is better able to use coal as a trading threat to Australia than iron ore because it has alternate sources of supply, both domestically and from other exporting nations, for coal. Australian coal mining firms are looking to diversify cargoes to southeast Asia, particularly Vietnam, and to try to build market share in more mature markets in north Asia, in case access to China becomes more difficult. Many do not think that China will be able to stop delivery of Australia coal, but are concerned about its ability to curtail it. China's imports of Australian thermal and coking coal were strong in the January-March quarter, as the market reopened following a filling of Chinese import quotas in the second half of 2019, according to the latest Australian Bureau of Statistics data. April also seems to have been a reasonably strong month, according to port data. But initial shipping data show fewer ships being loaded at some key ports in the first half of May.

China’s benchmark power coal price edges up

The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of coal prices in north China’s major ports, stood at 528 yuan (about 74.3 U.S. dollars) per tonne, up 2 yuan week on week, according to Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. Analysts said that a rebound in the index came due to factors including the limited domestic raw coal production, a year-on-year increase in power plant coal consumption demand, the expected tightening of coal import policies and a jump in spot coal prices at ports. According to statistics, coal stocks at ports have dropped by more than 8 million tonnes from last month’s high. A short-term mismatch between supply and demand in ports has rapidly taken shape, according to analysts.

Indonesian coal miners suffer impact from India’s lockdown

Indonesian coal miners are struggling with slow demand this year as businesses in India, one of the country’s major coal markets, hit the brakes due to a prolonged lockdown to contain the COVID-19 outbreak, a data firm has said. The South Asian country’s coal imports, a commodity mostly used for power generation, is projected to decrease by 19.1 percent year-on-year (yoy) to 149 million tons, according to IHS Markit. As India’s demand slows, IHS Markit projects a 10 percent yoy decline in Indonesian coal exports to 406 million tons this year, from last year’s figure of 451 million tons.

The consultancy initially projected Indonesian coal exports at 419 million tons before India announced an extended lockdown and before market conditions worsened in Southeast and East Asia, which are Indonesia’s other major coal export markets. Indonesia’s trade balance recorded a deficit of US$350 million in April, as exports fell 7.02 percent, on the back of falling commodity prices and plummeting global demand due to the pandemic.Indonesia’s two most profitable coal miners last year, privately owned PT Adaro Energi and state-owned PT Bukit Asam (PTBA), previously highlighted India’s lockdown as notable risks going into the second quarter, aside from declining local demand.