- Calendar year 2020 began with strong momentum in coal imports. Both January and February continued seeing growth, after ending 2019 on a strong note. But March 2020 the momentum was broken, and this cannot be attributed to Covid19 as the pandemic started hurting the Indian economy only from second half of March 2020.
- Economic uncertainty due to Covid19 did manifest itself in March but this did not impact coal imports that originated from countries with long voyages such as the US and Colombia as these coals would have been loaded in February. But the figures of coal arrivals in March clearly show that coal from Indonesia, which has the shortest voyage time, contracted sharply both on a year-on-year basis as well as a month on month basis.
- India’s coal production has not grown in FY 2019-20. Total production of coal stood at 738 Million tons against 739 Million ton in FY 2018-19. After severe disruptions in Sep & Oct 2019 due to an extended monsoon, production bounced back strongly. Jan, Feb and March 2020 saw the highest monthly coal production ever in the country’s history and Coal India has stated that it has no plans to cut back it coal production target for 2020-21 despite the contraction in demand.
- With Coal India building stocks at both the power plants and pit heads, there are no immediate coal supply constraints visible. Power plants have 49 Million Ton stock which is equivalent to 29 Days stock
- With pre-existing weak demand for coal in Europe & COVID induced structural collapse in demand for electricity, we anticipate serious supply disruptions in the coming months. With no other alternate market, Jan & Feb 2020 saw the emergence of spot supplies from Russia and Colombia. Q1 2020 saw the emergence of supplies from Russia, Colombia & Kazakhstan.
- Based on USEC load ports information, a a number of NAPP Cargoes are scheduled reach Indian shores in Mar & April 2020, mostly headed to the retail market or cement plants located deep hinterland.
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