coal monthly review may 20 - steelmint

COALMONTHLY REVIEW APRIL’20

NON COKING COAL COKING COAL

MET COKE

TOTAL COAL IMPORT

PET COKE

INDIAN COAL IMPORT(Qty MnT)

Pg 01

COAL MONTHLY REVIEWR

FEB'20 MAR'20

1.41

2.813.30

2.191.68 1.89 1.82 1.74

1.28 1.62 1.991.35 1.22 1.12 1.10 0.88 0.84 0.84

8.057.33

Mormugao

16.81

15.13

FEB'20 MAR'20

4.98

5.29

FEB'20 MAR'20

0.69

0.94

FEB'20 MAR'20

0.11

0.23

FEB'20 MAR'20

22.68

21.76

FEB'20 MAR'20

COKING COAL MAJOR RECEIVERS QUANTITY (MT) NON COKING COAL MAJOR RECEIVERS QUANTITY (MT)

RECEIVER FEB'20MAR'20 M-o-MRECEIVER FEB'20MAR'20 M-O-M CHANGES

Pg 02


SAIL 1568834 1092894 44%

-

JSW STEEL 1253536 1154787 9%

N/A

TATA STEEL 844444 1083516 -22%

Grand Total GRAND TOTAL

HALDIA 470452 412894 14%

VIZAG 432711 283000 53%

PARADIP 370751 101000 267%

DHAMRA 294920 251000 17%

GANGAVARAM 45000 N/A

MORMUGAO 671564 684890 -2%

JAIGARH 438972 365897 20%

KRISHNAPATNAM 88000

KARAIKAL 55000

ENNORE 104000

DHAMRA 504540 387278 30%

PARADIP 155510 491808 -68%

VIZAG 99000 N/A

HALDIA 85394 204430 -58%

RINL 387073 235850 64%

GANGAVARAM 387073 235850 64%

JINDAL STEEL & POWER 379113 617789 -39%

PARADIP 186360 472266 -61%

VIZAG 117753 70500 67%

GANGAVARAM 75000 75023 0%

BHUSHAN STEEL 82500 N/A

PARADIP 82500 N/A

MMTC 79848 N/A

PARADIP 79848 N/A

RAWMET COMMODITY 77900 72102 8%

PARADIP 77900 N/A

HALDIA - 26000 N/A

KRISHNAPATNAM - 46102 N/A

BHUSHAN POWER 73452 79250 -7%

VIZAG 73452 79250 -7%

OTHERS 543397 647217 -16%

5290097 4983405 6%

-

-

-

N/A

N/A

-

-

-

-

-

-

15134246 16810622 -10%

3034718

576542

494002

450890

375125

1138159

1013536

236761

208600

161241

127934

279000

885458

830458

55000

640367

314514

161260

144093

20500

-

585259

585259

548967

548967

-

-

329023

329023

327256

327256

320586

320586

7449076

3474193

129004

1530767

325152

386738

1102532

1106778

229250

121291

72937

62900

620400

225500

165000

60500

1067933

354133

327830

308630

-

77340

758401

758401

89368

-

30000

59368

1359330

1359330

164946

164946

-

-

8564173

ADANI ENTERPRISES -13%

KANDLA 347%

MUNDRA -68%

NAVLAKHI 39%

HAZIRA -3%

OTHERS 3%

AGARWAL COAL -8%

NAVLAKHI 3%

TUTICORIN 72%

GANGAVARAM 121%

MANGALORE 103%

OTHERS -55%

ADANI POWER 293%

MUNDRA 403%

DHANU -9%

SWISS SINGAPORE -40%

KANDLA -11%

GANGAVARAM -51%

KRISHNAPATNAM -53%

REVDANDA N/A

OTHERS N/A

SEMB CORP GAYATHRI POWER -23%

KRISHNAPATNAM -23%

JSW MINERALS 514%

KANDLA N/A

REVDANDA N/A

PARADIP N/A

COASTAL GUJARAT POWER -76%

MUNDRA -76%

IMR RESOURCES 98%

GANGAVARAM 98%

SHRI CEMENT N/A

MUNDRA N/A

OTHERS -13%

Indonesian Coal Production RemainsCommensurate With Full-Year Target


INTERNATIONAL

Indonesia's Ministry of Energy and Mineral

Resources stated that the country's coal

production as of April this year reached 187

MnT, which's equivalent to 34% of the full-

year target of 550 MnT.

Director of Coal Management and

Development at the ministry, Sujatmiko said

that the four-month production performance

remains in line with the government's target.

"Nevertheless, the realized output is down

by 5% as compared to the production in the

corresponding period of 2019", he said.

Sujatmiko said that realized coal domestic

market obligation (DMO) in the first quarter

of this year stood at 31.53 MnT, or about

20.34% of the full-year DMO volume target of

155 MnT.

He said that of the realized DMO volume,

about 25.6 MnT were absorbed by the power

plant sector, while 5.93 MnT by other

domestic industries.

Under existing coal DMO regulation, coal

miners in the country are obliged to allocate

at least 25 percent of their annual coal output

for the domestic market including power

plant sector and other industries.

Sudjatmiko explained that the threat of coal

price correction in the global market is

believed to have begun to affect domestic coal

production and sales.

"If the Covid-19 pandemic continues,

domestic coal demand is expected to fall by

around 5 percent", he said.

Although the impact of the coronavirus

pandemic has had an effect on performance

this year, Sujatmiko ensured that the ministry

would not adopt a policy of changing targets.

"The government continues to monitor the

conditions and situation of national coal mining

production operations in order to remain smooth

in accordance with the existing situation and

dynamics", he said.

Pg 03

During the three-year campaign, authorities

will reinforce efforts now being undertaken to

eliminate small-sized mines below 300,000

t/y of raw coal capacity, he reiterated.

According to the national standard,

underground mines above 1.2 million

tonnes/year and open-cut mines above 4

million t/y in raw coal capacity are identified

as large-sized operations, while small-sized

underground and open-cut mines are those

whose capacities are below 450,000 t/y and 1

million t/y respectively. Some 90% coal mines

in China are underground operations.

Besides stepping up the elimination of small

mines, the campaign aims to encourage

improved levels of mechanization, automation

and intelligent operations at coal mines. For

example, the number of mines nationwide

widely adopting 'intelligent' or smart mining

and extraction technology at their workfaces

will increase from the existing 280 to reach

1,000 by 2022, or equivalent to 1-1.5 billion

t/y of raw capacity, Li said.

Over the same period, supervision of coal

mining activity will be intensified, and remote

supervision systems will be installed in all

mines under construction or in normal

operations during the three years, according

to Li.

China has made significant progress in

improving mining capacity over the past few

years, Li said. For example, the number of

domestic coal mines in operation has

significantly declined from some 37,000 in the

early 2000s to only 5,268 by the end of 2019.

Over the same period, fatalities from coal

mining accidents fell from around 9,500 per

year to reach 316 in 2019, he noted.

Last year, deaths among Chinese coal

miners per million tonnes of raw coal

produced refreshed its record low at 0.083,

according to official data. However, the rate

remains higher than those in other major coal-

mining countries with rigorously enforced

safety standards including Australia.

South African Coal Mines resumeOperations as Lockdown easesWith the lockdown restrictions being partially

eased in South Africa starting May, the

country's open cast mines are set to resume

full operations while all other mines will

operate at 50% capacity. The South African

mining companies are setting up shared

quarantine facilities for miners testing

positive for COVID-19 and are discussing

other ways to cope up with the pandemic.

Some of the preventive measures to be

followed include screening of staff daily for

Covid-19 symptoms, including a temperature

assessment. All employees will have to wear

cloth masks. Employers have to make

sanitisers available or hand washing facilities

with soap.

South Africa imposed a nationwide

lockdown in the last week of March till 30

April in order to contain COVID-19 spread in

the country. During the lockdown, only those

mines supplying coal to state-owned utility

Eskom were allowed to operate at full

capacity as electricity is classified as an

essential service under the country's

regulations.

While till 14 April mining operations of all

the other companies were completely shut,

post that few mines were allowed to operate

at a 50% capacity, only after they obtained

special permission from mining and energy

minister Gwede Mantashe to operate at a

higher production level.

Starting May only those sectors with a low

rate of Covid-19 transmission and high

economic or social value are being allowed to

resume in the country. All businesses

including mines are directed to maintain strict

health and safety protocols, including disease

surveillance, infection prevention and

stringent social distancing measures where

possible.

China Unveils 3-year Campaign to BoostLarge Coal MinesChina will continue to retire small-sized and

inefficient coal mines to improve mining

safety and optimize the industry's structure,

according to Li Haowen, deputy director of

the Ministry of Emergency Management's

General Office.

By 2022, coal mines which the ministry

categorizes as 'large-sized' – underground

mines whose raw coal capacity is above 1.2

million tonnes/year and open-cut mines above

4 million t/y – will exceed 70% of all mines in

operation, Li declared on Tuesday.

Introducing a new three-year central-

government campaign focussing on safety

operations over 2020-2022, Li noted that

rectification work to enhance safety in

coal mines nationwide is one of nine key

areas the scheme aims to target. The

campaign, which officially started this

month, will address issues in several other

areas including production and use of

hazardous chemicals, fire safety and

transportation.

"As a high-risk industry, coal mining is

relatively special and particularly prone to

incidents caused by gas bursts, coal dust,

fires, roof collapses and rock bursts", Li told

media attending a press conference in

Beijing Tuesday.

International Non-Coking CoalFOB Prices (Average)

Indonesia (4200 GAR)

Australia (6000 NAR)

Indonesia (3800 GAR)

South Africa (6000 NAR)

4549535761656973778185899397

101105109

Mar’19 Apr’19 May’19 Jun’19 Jul’19 Aug’19 Sep’19 Oct’19 Nov’19 Dec’19 Jan’20 Feb’20 Mar’20

404550556065707580859095

100105110

21

23

25

27

29

31

33

26

28

30

32

34

36

38

40

42


Pg 04





Coal mining industry which accounts to 8% of

the country's economic output suffered a

huge setback with the halt in operations for

just one month. Majority of mining giants such

as Glencore, Anglo American, and South 32

have revised their coal production guidance

for 2020. Now with lockdown and other trade

restrictions being in place in major export

destinations due to COVID-19, the outlook

for South African coal exports also remains

bleak in the near term.

How COVID-19 has Played Havoc on ThermalCoal Prices Globally?

The outbreak of the Coronavirus pandemic

has taken a huge hit on various commodities

including thermal coal. With the halt to

industrial activities and trade restrictions

being imposed globally, the demand for power

and steel has been adversely impacted and so

does the thermal coal requirement from these

sectors.

India and China are the top two thermal

coal importers across the globe whereas

Indonesia and South Africa are the key

exporters of the same.

Plunge of 25% in Indonesian thermal coal

prices

The price of Indonesian thermal coal has

slumped to four years low with the most

popular grade of non-coking coal having an

energy value of 4,200 kacl/kg, GAR basis

touching a mark of USD 26/MT, FoB basis last

week. In two months, the same has recorded a

plunge of 25% which is highest so far in such a

short interval.

In the case of Indonesian coal's biggest

importer, China, although it is a net importer

of thermal coal the country still has its

domestic supplies and it seems that Chinese

domestic coal prices have also fallen

considerably amid tepid in-house demand.

The benchmark price at Qinhuangdao SH-

QHA-TRMCOAL has slipped 13.6% from its

peak so far in 2020 of RMB 573/MT (USD

81/MT) on 26 Feb'20 to RMB 473/MT in mid

of April. This price is below the informal price

range that the government has set for

domestic thermal coal of RMB 500 to

580/MT.

This means that the Chinese authorities

may once again encourage traders and power

plants to limit thermal coal imports, to boost

domestic demand and prices in the coming

months.

'Never seen before' fall in South African coal

rates

Pg 05


The South African thermal coal prices that

had enjoyed premium against others in the

winters of 2019 have crashed dramatically in

the last one month. The popular grade, RB2

prices in the country have registered a plunge

of almost 50% in last two months and touched

a new low at USD 35-37/MT, FoB basis for

May shipment.

India's daily average power output has been

20% lower than the three-year seasonal

average since the government instated a

nationwide lockdown on 25 March. This has

subsequently weighed heavily on the

country's coal consumption, as coal-fired

generation makes up around 80% of national

power generation.

With the fall in power demand there are

increased supplies and stocks of thermal coal

from domestic mining behemoth, Coal India

(CIL). Aggregate coal stocks among utilities

that rely wholly on or in part on imported

supplies stood at 21.5 MnT in February, well

above the 12.7 MnT during the same period in

2019. Apart from this the CEA data shows

that the power plants across India have

average coal stock for 31 days which was 17

days around the same time last year. Thus, it is

likely that utilities' imports may be further

dampened by comparatively full stocks with

the plants.

Apart from this there is hardly any

imported coal demand from sponge iron units

and cement sector since the lockdown

happened, further weighing down on thermal

coal demand and prices in the country. India

imported about 15.1 MnT of thermal coal in

Mar'20 against 16.9 MnT in Feb'20 and 17.8

MnT in previous year's Mar'19 which is

anticipated to fall further in Apr'20.

Coking Coal Import Contracts PostponedBut Not Cancelled: SAIL Chairman

DOMESTIC

As the Coronavirus (Covid-19) pandemic

continues disrupting India's domestic steel

demand, CoalMint spoke to the Maharatna

PSU Steel Authority of India Limited (SAIL)

chairman Anil Kumar Chaudhary.

In an interactive webinar session conducted

live today, Mr. Chaudhary talked about the

forthcoming demand outlook for steel and its

potential consequences on the steelmaking

raw materials sector, which primarily

comprises of iron ore, coking coal and ferro

alloys.

He admitted that coal prices have definitely

come down in the current quarter — the price

index for premium low-volatile (PLV) hard

coking coal (HCC) has decreased by nearly 30

percent from around USD 150/MT on 31st

March to a level of USD 107/MT at present.

However, given the fact that coal prices are

always fluctuating in the market, how long the

current prevailing prices will sustain remains

to be seen.

As market demand picks up for steel, there

will be additional demand for coking coal and

hence prices may go up post-July, according

to him.

Coking Coal Prices Sink As Import Demand

Shrinks Amid Steel Output Curbs

Seaborne coking coal prices have continued

on a declining trajectory throughout the past

two months, with prices across all categories

hitting multi-month lows, as subdued demand

conditions persisted globally amid production

cuts by a vast majority of steelmakers outside

of China.

Following the rapid outbreak of the novel

corona virus disease (COVID-19) since end-

January, there has been an inevitable decline

in demand for steelmaking raw materials, as

global steel industry giants became amenable

to declare force majeure on raw material

procurement.

CIL Performance in March 2020

WCL NCL

23.03

13.25

19.25

13.36

11.44

5.45

10.58

5.19

10.028.38

6.505.07

3.402.65

0.140.10

0.00

5.00

10.00

15.00

20.00

25.00

SECL MCL CCL ECL BCCL NEC

Production

84.36

Offtake

53.45

Australian Premium HCC Monthly Average Price

112.00118.00124.00130.00136.00142.00148.00154.00160.00166.00172.00178.00184.00190.00196.00202.00208.00214.00220.00226.00232.00238.00244.00250.00

Fo

B P

rice

s in

US

D


212.07

204.16

208.39

198.14

180.89

160.45

147.88

147.32

138.28 135.38

147.1154.25

160.50

International Non - Coking Coal Average Prices (CFR India) Country/Grade

Australia 6000 NAR

South Africa RB2

Indonesia 4200 GAR

Indonesia 3800 GAR

Mar'20 Feb'20 Jan'20

83.0 83.00 80.69

63.0 76.6 82.0

45.0 45.0 44.2

39.0 39.0 38.2

==

=

Pg 06


CIL's coal dispatch to the power stations has

decreased 6% on the year to 463 MnT in

FY19, on account of subdued demand for

electricity. The miner had supplied 491.5 MnT

coal to the power sector in the previous fiscal.

The lower coal off-take was largely affected

by slowdown in industrial activities, which

resulted in a decline in electricity generation.

Data provided by power ministry showed that

power output from coal fired plants had

dropped 2.5% Y-o-Y to 962.85 BU in FY19 as

against 987.68 BU in Fy18.

Eventually, coal consumption by the power

plants was marginally reduced to 622.22 MnT

in FY19 compared with 628.94 MnT in FY18.

It is to be noted that power plants procure fair

amount of domestic coal from other miners

excluding CIL, apart from catering ingenious

supply from the captive mines.

As a matter of fact, coal dispatch by

Telangana based miner-SCCL had also noted a

fall to the power sector, which was recorded

at 52.95 MnT in FY19 against 55.38 MnT in

FY18.

In India, a nationwide lockdown enforced

effectively from 22nd March has since been

causing labour shortages and logistical

constraints for both inland cargo

transportation as well as incoming shipments

at various coal-handling ports, and as a

consequence the country's domestic demand

for steel has plummeted.

CoalMint had already reported earlier that

most of India's leading steel producing

companies including SAIL, JSW Steel, Tata

Steel and ArcelorMittal NipponSteel have

either scaled down their manufacturing

operations at all sites or suspended

operations in certain locations in response to

decline in industrial activity.

Accordingly, the country's biggest coking

coal importing companies have refrained from

signing new import contracts, influenced by

expectations of production disruptions during

the lockdown period.

Several companies are also heard to have

been requesting their overseas coal suppliers

for delays to their contracted second-quarter

cargoes, as sentiment in steel markets

weakened further with the Indian

government extending the lockdown period in

multiple phases until May 17.

In this context, Mr. Anil Kumar Chaudhary

concurred by saying that “SAIL is

contemplating postponement of incoming coking

coal shipments under existing long term

agreements”, but he also clearly mentioned

that the company has not taken any decision

on cancellation of order shipments at this

point of time.

He added by saying that the company is

planning to increase its coal inventories from

35 days to 40 days.

CIL's Coal Supply to Power SectorDrops 6% Y-o-Y in FY19 Dispatch to non-power sector:

Lower demand from power sector presented

CIL with a chance to liquidate arrear coal

rakes of non-power sector during FY19. The

Excessive stock pose threat to CIL's growth

Despite failing to post a growth in annual

dispatch volume, CIL had made frantic efforts

to raise supplies to the power plants lately by

delivering coal in excess of 40 MnT during

each of the last 4 months of Fy19.

However, with near correction in demand

weaken by the imposed lock-down, coal stock

at the power plants have reached an

unprecedented level by crossing the 50 MnT

mark. As on 28 Apr'20, coal stock at power

plants having coal linkages, was assessed at

50.747 MnT, enough for 31 days of power

generation.

It is expected that the excessive stock

would lessen buyer's urgency to procure

additional supplies thereby affecting CIL's

growth plan for the fiscal.

miner had increased coal dispatch to non-

power sector by 2% Y-o-Y to 118.66 MnT.

No such improvement was seen in case of

SCCL who had recorded a 22% drop in coal

supplies to the non-power sector.No such

improvement was seen in case of SCCL who

had recorded a 22% drop in coal supplies to

the non-power sector.

COAL Monthly REVIEW [ APRIL 2020]

Report By -Abdul Sayeed Khan(Associate-Research, CoalMint)Email Id: [email protected]

HEAD OFFICE#301, Jeevan ParisarRajeev NagarBehind Crystal ArcadeRaipur - 492007 (C.G) IndiaTel: +91-9770056666

BRANCH OFFICENarayani BuildingRoom No. - 1F, 2ASarat Bose RoadKolkata - 700020, IndiaTel: +91-7044070530

Aditya Sinha (Analyst, CoalMint)

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R

Australian Coking Coal Prices

Australian coking coal prices fell this month as the ongoing coronavirus pandemic hindered demand in the ex-China markets, particularly in India, following a countrywide lockdown order from the government for three weeks starting March 24.

What Happened

Indian demand for seaborne coking coal is expected to remain subdued in the near term, while Chinese buyers are still waiting on the sidelines and are expecting further downward correction in seaborne met coal prices.

What May Happen

Indonesian Coal Prices

Indonesian thermal coal prices declined as offers edged lower amid lackluster seaborne buying interest from India, wherein fresh demand is not expected in the near term as industrial activity has come to a standstill following lockdowns.

What Happened

South African Coal Prices

South African thermal coal export demand lost steam over the past month amid bearish sentiments, as India and South Africa both announced nationwide lockdowns to curtail the spread of the ongoing coronavirus pandemic.

What Happened

South African thermal coal prices are likely to remain subdued in the near term, while export operations from the country's Richards Bay (RBCT) port are anticipated to be at reduced levels.

What May Happen

Indonesian thermal coal export prices should find some support with Chinese demand for imported material picking up gradually after recovery from COVID-19.

What may Happen

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coal monthly review may 20 - steelmint

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