India's coal imports slump as economy lockdown bites Viewpoint,  Import & Export,  International 2020-06-01 14:30:36

India's imports of coal collapsed to the weakest in at least five years in May, as the economic lockdown in the world's second-biggest importer of the polluting fuel took its toll.

Imports were estimated at 9.17 million tonnes in May, according to vessel-tracking and port data compiled by Refinitiv, the lowest result since Refinitiv started collating data in January 2015.

While the numbers are still subject to revision, it's clear that May's imports will come nowhere close to the 14.64 million tonnes in April, or the 21.2 million tonnes in May last year.

There is little doubt that the major contributing factor to the slump in coal imports has been the lockdown of much of India's economy, which started in March and has now been extended in certain areas until the end of June.

India's cases of the novel coronavirus have surged past 180,000 and the associated COVID-19 disease has claimed more than 5,000 lives.

The economy has been hit, with March quarter growth dropping to 3.1%, the weakest in eight years amid expectations that the June quarter may see a reduction as large as 20%.

The slump in economic growth has curbed power demand, which has fallen an estimated 25% during the lockdown.

The drop in demand has been most pronounced in coal-fired generation, which plunged 32.3% in April, while that for solar generation rose 16.9%, according to an analysis of government data.

In these circumstances it's not surprising that coal imports have suffered, and a breakdown by country of origin underscores that it's largely coal-fired generation that has taken the hit.

India's imports from top supplier Indonesia, which typically ships lower-energy coal used for power generation, dropped to 3.6 million tonnes in May, down from 5.24 million in April and 8.34 million in May 2019, according to Refinitiv.

However, imports from Australia, which supplies mainly high energy coal for steel-making to India, were 2.42 million tonnes in May, down modestly from 2.78 million in April, although the decline from last May's 4.38 million was steeper.

It's also interesting to note that imports from South Africa virtually collapsed in May, plummeting to just 695,000 tonnes from 2.44 million in April and 5.02 million in May last year.

While South African coal is used for power generation, it is also widely used in industries, such as cement-making and ceramics, and the collapse in demand fits in with the loss of economic activity during India's lockdown.

Coal decline structural?

As India starts to re-open its economy, it would be logical to expect that coal demand will once again pick up, but it's also possible that India's imports are shifting structurally lower.

It's no secret that the government wants to see lower imports in order to save on foreign exchange as well as promote the domestic mining industry.

The latest move in that direction saw India's environment ministry reverse a 2014 decision that placed limits on the amount of ash in coal at some plants.

This meant that domestic coal, which is mainly high in ash, had to be washed in order to lower its ash content, or that imported coal with low ash, such as from Indonesia, was used as a substitute.

By allowing more coal-fired plants to use high ash coal, India will most likely increase demand for domestic coal while trimming that for imported fuel.

Another factor to consider is the increasing availability of renewables such as solar at prices lower than for electricity generated by coal.

This means investment is likely to flow into renewables at a far greater pace than for coal, and it's unlikely that new coal-fired plants based on using imported fuel would be economically viable.

(Writing by Alex Guo  Editing by Tammy Yang)
For any questions, please contact us by or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 China coking coal market shows signs of softening on weak sales 2020-07-15

China's coking coal market saw signs of weakening mid this week, pressured mainly by stock pile-ups and dwindled sales at mines. On July 15, the index for Lingshi fat coal was stable on t

2 S Korea Jun coke imports fell to a 3-yr low 2020-07-15

South Korean coke imports in June were falling for the third consecutive month to a new low of 18,200 tonnes since February 2017, according to the latest data from South Korean Customs. T

3 Chinese spot thermal coal market stays weak on bearish outlook 2020-07-15

China's spot thermal coal market continued weakening in the middle of this week, as bearish sentiment kept end buyers sidelined and reduced coal transactions significantly. Coal prices at

4 Indonesian thermal coal export prices may remain depressed by low buys 2020-07-15

Export prices of Indonesian thermal coal are likely to be further depressed by sluggish demand from China and India in the short run, owing to China's stringent import curbs and India's tepid industri

5 China Coal Daily Track (Jul 15) 2020-07-15

Thermal coal Production area Most miners saw smooth sales of slack coal in Yulin of Shaanxi, but price pickups slowed down on the whole. Control of coal sales quotas remained strict in Ordos, an

6 China's cement prices fall 30 yuan/t facing slack demand 2020-07-15

Main cement brand companies in China including Conch Cement and South Cement lowered cement prices by 30 yuan/t from July 11 in Nanning and Beiliu cities of Guangxi, in response to lukewarm demand ami

7 China early-Jul daily crude steel output up 5.81% YoY 2020-07-15

The daily output of crude steel averaged 2.13 million tonnes at China's key steel mills in early July, down 0.53% from late June while up 5.81% from last year, according to data from China Iron and St

8 S Korea Jun coal imports up 1.53% MoM 2020-07-15

South Korea's coal imports totaled 9.86 million tonnes in June, falling 3.2% from 10.19 million tonnes a year ago but gaining 1.53% from a month earlier, showed the latest customs data.

9 Shanxi looks to build coal chemical giant through merger 2020-07-15

China's coal-rich Shanxi province is looking to create coal chemical giant by merging coal chemical assets of three state-owned companies – Shanxi Lu'an Mining Group, Yangquan Coal Industry Group and

10 China thermal coal prices rise in early Jul 2020-07-15

Thermal coal prices further picked up in China in early July, as the high demand season kicks in with more power demand for air-conditioning use and import curbs remain stringent. From Ju

Most Read Articles

1 NDRC doesn't rule out possibility to ease thermal coal import restriction, sources 2020-07-10

China's state planner, the National Development and Reform Commission (NDRC), didn't rule out a possibility to ease restrictions on thermal coal imports, sources said, if domestic supply is unable to

2 China on track to build 6-8 nuclear power units annually in 2021-25 2020-07-09

China is on track to launch six to eight nuclear power generation units each year between 2021 and 2025, according to a report recently issued by China Nuclear Energy Association on nuclear developmen

3 China's state planner summons meeting, fanning speculations on coal import policy 2020-07-09

Chinese state economic planner was reportedly to summon a meeting on July 9 to stabilize domestic thermal coal prices that have spiked too quickly, according to one source with acknowledge of the matt

4 Yangquan Coal Group H1 coal sales and railway shipments hit record highs 2020-07-09

Coal giant Yangquan Coal Industry Group Co., Ltd. created all-time highs in its coal sales and railway transport in the first half of 2020, the group said. The Shanxi-headquartered

5 Border closure to tighten Mongolian coking coal supply, fanning bullishness 2020-07-09

Mongolian coking coal prices in China may find support from looming supply reduction, as the country will close border crossings with China for auto vehicles during national Naadam Festival holiday (J

6 Chinese thermal coal moves sideways with downward bias 2020-07-09

Chinese domestic thermal coal prices stayed flat at northern ports on July 9, following a fast pickup for almost a week, affected by Huaneng's announcement on tightening purchase for spot cargoes. &nb

7 China has 52 10-Mtpa-level coal mines in operation 2020-07-10

China has 52 10-Mtpa-level coal mines with the total approved production capacity of 821 million tonnes per annum (Mtpa) as of now, accounting for 1/5 of the total capacity of operating coal mines in

8 Chinese traders see thermal coal prices remain stable in near term 2020-07-10

Chinese domestic thermal coal prices continued to be stable northern ports on July 10, unchanged for the third consecutive day after a week-long rally, convincing traders that the market will remain u

9 China's Jun coal imports continue to rise despite customs restriction 2020-07-14

China's coal imports in June increased nearly 15% from a month earlier, official data showed, despite the government's effort to curb import of the material from overseas. China imported

10 Mongolia H1 coal exports plunge by over 50% YoY 2020-07-10

Mongolia exported 8.65 million tonnes of coal in the first six months of 2020, plummeting by 52.01% from 18.03 million tonnes in the corresponding period of last year, according to data from the Mongo

Scan to download mobile APP