Pakistan's thermal coal imports rise marginally in Oct'22 on higher shipments from Indonesia

After falling sharply last month, Pakistan's thermal coal imports rebounded, rising slightly by 3% m-o-m to 825,192 tonnes (t) in October, CoalMint's vessel data reveals.

The rise in shipments was contributed by Indonesia which showed a whopping 62% m-o-m increase to 0.5 mnt, followed by imports from South Africa at 0.1 mnt, up by 6% m-o-m. Imports from Mozambique, however, declined by 53% m-o-m to 115,060 t in October.

The decline in Indonesian and South African coal prices contributed to the rise in shipments from these two countries. Prices fell because of a decline in European inquiries last month and which provided an opportunity for emerging markets to make purchases.

South African 5500 kcal/kg NAR fell by 9% last month to $195/t FOB, while Indonesian-origin material of similar grade fell slightly by 4% to $172/t FOB.

However, a major rise in imports was capped as power utilities in Pakistan switched back to using more of domestic coal sourced from the Thar region for blending purposes.

Power companies resort to blending coal

Pakistan's power ministry has approved proposals from several power utilities for onsite testing of Thar coal blending. Port Qasim Electric Power Co Ltd is set to blend 10% of Thar coal with imported coal as a first step towards conversion of its 1,320-MW project based on imported coal.

Domestic coal usage so far had been limited in the country as the power utilities were designed for using imported coal. However, elevated global prices has compelled them to switch back to indigenous coal as power generation using Thar coal allows for one of the cheapest in the country.

Power production on Thar coal costs PKR 4.39/kWh (kilowatts per hour) at present, which includes fuel (coal) costs at PKR 3.74 per unit, according to the National Transmission and Dispatch Company (NTDC). The imported coal usage cost stands at around PKR11.05 per kWh.

Demand from cement sector stable

Pakistan's cement sales are seen remaining firm at 4.3 mnt in October amid slower pace of recovery in the construction industry following higher-than-expected rains, and the inflationary impact restricting demand growth.

Pakistan's cement sector was heard sourcing coal from neighbouring Afghanistan.

Outlook

Thermal coal imports into Pakistan are likely to remain in a tight range with rising demand for blending with indigenous coal. Power production on Thar coal is estimated to increase to 2,600 MW by the end of next year (December 2023), as other mine-mouth power projects in the pipeline will come online.