Key highlights
• Pakistan’s coal imports in Sep’20 stood at 1.28 mn t against 1.24 mn t in August, and on y-o-y basis the same has inched down by 1.56%.
• While South Africa continued to remain the top coal exporter to Pakistan followed by Indonesia, imports from Indonesia surged by 67% whereas that from South Africa fell by 21% m-o-m basis.
• Last month also saw Pakistan import 60,000 tonnes of thermal coal from Australia.
What made Indonesian coal an attractive option?
As Pakistan’s economy is returning to normalcy, power demand is also rising steadily. While LNG is the primary source of power generation for Pakistan, the country is facing dwindling indigenous gas supply due to lack of exploration licenses. This has supported coal-fired power generation in the country. As Indonesian coal is suitable for electricity generation, its imports has increased m-o-m basis.
On the supply side, due to less than usual demand from India (major export destination), Indonesian coal suppliers are eyeing other markets like Pakistan, Bangladesh and Vietnam. Also, Indonesian coal prices have fallen to an all time low this year due to COVID-led sluggish global demand, making Indonesian coal an attractive option for Pakistan.
South African coal in Pakistan is used primarily by cement sector. However, as Indonesian coal was available in plenty in the country and that too at cheaper rates, cement producers opted for Indonesian over S.African coal.
Future Outlook:
Pakistan’s petroleum minister has recently said in a press conference that the country is headed towards a major gas shortfall in December and January.
We believe coal-fired power generation in Pakistan would get a boost and so would the thermal coal demand in the country. Apart from this, the Pakistan government’s planned public sector development programme would increase domestic demand for cement, thus fuelling its coal requirement and imports.
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