Pakistan's coal imports surge over 30% in July with sharp rise in shipments from South Africa

After falling sharply last month, Pakistan's thermal coal import shipments rose 32% month-on-month (m-o-m) to 908,072 tonnes (t) in July, CoalMint vessel data reveals.

The rise in imports owes to a sharp spurt in shipments from South Africa and Mozambique, as elevated Afghan coal prices compelled traders to switch to traditional destinations.

"Afghan coal prices have risen sharply in the last one month post the government's decision to hike prices. Along with this the pace of deliveries has also turned very slow as truck deliveries are taking time for clearance at the border," a Pakistani trader source said.

"Imports from Tajikistan were also disrupted due to a higher transit fee and the fact that for a month the authorities didn't allow transit, thereby causing a delay in deliveries," he added.

The trade prices for South African 6250 kcal/kg NAR grade coal are currently at $266/t, while Afghan 6400 kcal/kg coal prices are at $222/t.

Pakistan's coal imports from Afghanistan had picked up in the last few months as elevated global prices compelled the government to allow imports from Afghanistan in the Pakistani currency. However, in a major turn of events, Afghanistan doubled its coal prices over $200/t following rising demand from Pakistan.

Trade balance

*Qty in mnt

Surge in power demand

A sharp rise in power demand in Pakistan has resulted in rise in shipments from South Africa as the household and industrial sectors continue to witness several outages and frequent load-shedding in various parts of the country.

According to the country's Power Division, electricity demand in Pakistan is 27,500 megawatts (MW), while supply is 22,000 MW.

Shipments from Indonesia, however, fell marginally by 4% due to limited availability of capesize vessels.

Cement sector demand weakens

With the strengthening of the US dollar, coal imports by Pakistan's cement sector have taken a hit, as is evident from declining sales.

The demand from the cement sector has been under pressure, falling by 8% during fiscal year 2021-22 (July-June) amid a sharp fall in exports and stagnant domestic intake. No major new construction and development activity in the country has been seen during the last year, according to the All Pakistan Cement Manufacturer Association (APCMA).

Amid the monsoon rains and Eid holidays, Pakistan's cement sales and exports in July also fell sharply: while overall cement dispatches were at 2 mnt, exports stood at 153,517 t.

Outlook

Despite high prices, Pakistan's coal imports are likely to remain within a similar range in view of the need to cater to domestic power demand. However, any further depreciation in the Pakistani rupee is likely to restrict rise in coal imports.