Pakistan's Coal Import Falls by a Trifle vis-a-vis Key South Asian Importers in Apr'20

According to the data maintained with CoalMint, Pakistan's coal imports have registered a marginal drop of 2% m-o-m basis at 1.21 MnT in Apr'20 with highest imports coming from South Africa.

The South African vessel line up data maintained with CoalMint reveals that Pakistan has overtaken India as the country's biggest coal importer with S.African coal exports to Pakistan standing at 0.89 MnT against exports to India at 0.77 MnT in Apr'20.

Alteration in country-wise imports

While South Africa remained the top coal exporter to Pakistan followed by Indonesia, a change was observed during the month with a percentage share of South Africa in country's total coal imports, increasing to 70% and that of Indonesia dropping to 17% against 33% (of both) in the previous month of March.

The key reason for this change can be attributed to the dramatic fall in South African thermal coal prices especially in April amid demand curbs globally. The South African coal suppliers aggressively looked for other export destinations as its key importer, India followed a month-long nationwide lockdown to contain the spread of COVID-19 restricting its domestic industrial activities.

On the other hand, in the case of Indonesia, its key export destination China lifted its lockdown restrictions and resumed industrial activities resulting which Indonesian coal suppliers were back focusing on the Chinese market. Indonesia has always been the largest coal exporter to China as the former enjoys a duty-free trade with China under FTA (Free Trade Agreement).

Apart from South Africa and Indonesia, Russia has emerged as one of the key coal exporters to Pakistan since the start of 2020. In April, country's coal exports to Pakistan stood at 0.27 MnT against 0.12 MnT in Jan'20. This is because the Russian coal exporters that enjoys lowest cost of coal production, have now started focusing on the Asian markets amid the reduced demand from European countries which used to be country's key export destinations.

Sector-wise analysis

If we analyse Pakistan's sector-wise coal imports, the coal demand from the power sector has recorded a plunge in April due to a halt in industrial activities following partial lockdown in the country.

However, country's thermal coal demand from the cement sector witnessed a surge in the first week of April, as Islamabad announced ease of restrictions on domestic construction activities and cement manufacturing starting from 14 April and also declared relief package for the construction sector giving boost to cement demand and in turn aided the sector's thermal coal requirement.

Outlook

With Pakistan set to ease lockdown restrictions in the country post 9 May, it is likely that the pace of industrial activities will increase and so does the power and thermal coal demand. Thus, it is anticipated that Pakistan's thermal coal imports may observe a surge in the month of May. Apart from this, South African coal is likely to continue its dominance in Pakistan's thermal coal market amid limited demand from India and Indonesian suppliers focusing on China.