India's Coal Import Shipments drop to Two Year Low at 16.9 MnT in Apr'20

The vessel line up data maintained with CoalMint reveals that India's coal import shipments have registered a noticeable fall of 16% m-o-m basis in April and stood at 16.9 MnT against 20.8 MnT in Mar'20 (excluding pet coke). A similar volume of shipments was last registered in Feb'18 at 16.6 MnT.

The halt in industrial activities due to lockdown during the month has taken a toll on Indian coal demand and supply both, resulting in a drop in its import. While the imported coal prices of key exporters like Indonesia and South Africa touched new lows, there was limited buying interest due to tight liquidity position in the market.

If we analyse types of coal imported, the highest quantity imported is of non-coking coal at 12.3 MnT (-19% m-o-m) followed by coking coal at 4.4 MnT (-16% m-o-m), met coke at 0.1 MnT (-52% m-o-m) and anthracite at 0.09 MnT (-46% m-o-m).

Non-coking coal imports

Non-coking coal which is majorly used in power, cement and sponge iron sector has recorded a plunge amid decline in country's power requirement by industries and businesses, tepid steel demand and limited construction activities respectively.

The government data shows that in Apr'20 India's power consumption dipped by 23% to 87.5 billion units compared to 110.1 billion units in April last year.

Although the government had partially eased the lockdown measures from 20 April and allowed certain economic activities, particularly in rural areas and non-containment zones, the demand continued to be low during the month as many of these units were reluctant to start due to a labour shortage and travel restrictions.

In case of construction activities, although the government had allowed resumption of construction work in non-containment zones starting from 20 April, it did not help much to boost the cement demand and so does its raw material, thermal coal requirement. While the select cement manufacturers resumed operations, they already had enough stocks of thermal coal, limiting imported coal demand during the month.

The sponge iron units also did not record any surge in steel demand that could boost the thermal coal imports especially from South Africa.

Coking coal and met coke imports

India is largely dependent upon imports of coking coal as majority of which produced in India has higher ash content. However, the coking coal and also met coke imports which are majorly used in steel sector have also fallen in April despite steel manufacturing being deemed as an essential service. This is because there was very limited steel demand in the country during the month and companies already had enough stock of raw material with them. Out of the total quantity of coking coal imported, highest imports were made by SAIL followed by Tata Steel, as revealed in the Coalmint's vessel line-up data.

The likely scenario

While lockdown in the country has been extended till 17 May, the government has eased certain restrictions in non-containment areas post 3 May, allowing industrial activities and businesses to resume operations with limited manpower and safety measures.

This is likely to boost country's power demand and construction activities in the ongoing month of May against previous month. However, as per our analysis, the growth in thermal coal imports during the month is anticipated to be muted because there is still time that power, cement and steel demand in the country touches the pre-lockdown levels. Apart from this, Indian mining behemoth, CIL has sufficient stock of thermal coal with them at present and the government had recently asked power generating companies to reduce coal import for blending purpose and replace it with domestic coal.