Cement sector builds up Indian thermal coal imports by 4% in September

Key highlights

• Indian thermal coal imports in Sep’20 stood at 12.4 mn t against 11.9 mn t in Aug’20, up by 4.08%. However, on y-o-y basis, the same has plunged down by 13%,as in Sep’19 it stood at 14.2 mn t.
• Indonesia remained the top exporter to India in Sep’20 with a marginal change m-o-m basis. Imports from South Africa increased by 14% m-o-m in Sep’20 and stood at 3.29 mn t.
• S. thermal coal once again made its entry in tothe Indian market in September after being absent in the previous month of August. While the imports from Mozambique have increased significantly and stood at 0.19 mnt.
• There were no thermal coal imports from Russia in September, whereas, from Australia the same fell by 35% m-o-m to37 mn t. Colombian coal imports into India iscompletely missing since the past two months.

Cement and power sector buy from U.S. and Mozambique

• Out of total imports by various sectors, highest m-o-m growth of 56% was recorded by the cement industry, as its imports stood at 0.77 mn t in September.
• Of all the direct imports made by cement manufacturers, highest quantity (0.13 mn t) was booked by Ultratech Cement from U.S. followed by Ambuja Cement at 0.09 mn t from Mozambique.
• Majority players booked thermal coal from Indonesia (about 0.36 mn t) followed by South Africa and Indonesia.
• Market study indicates that the cement industry demand has risen by 20% m-o-m and over 10%, y-o-y. The volumes have picked up with pan-India utilization at around 70%, led by a robust rise in construction activities post-monsoon across most regions.
• There was a marginal change in total imports by the power sector. Highest direct importer was SEMB Corp Gayathri Power with majority imports from Indonesia. This is followed by JSW Energy that imported maximum quantity from South Africa and Mozambique.
• The traders increased imports by 16% m-o-m in September to 6.04 mn t, which suggests that they see an improvement in demand and that the low prices were attractive to take positions. The top importer was Adani enterprise with 1.57 mn t of total imports in Sep’20.

CoalMint’s Outlook

India’s coal imports especially by the cement sector is likely to increase in the fourth quarter (Oct-Dec) as industry experts believe that cement industry demand is slowly improving after the Covid-led disruption and improved rural demand.

Moreover, as the Indian economy is opening up in a phased manner and the upcoming festive season, demand for power would increase and so does the thermal coal requirements.

While in case of the sponge steel sector, thermal coal stock of South African coal at Indian ports is still on the higher side, hence, growth in S.African coal imports could be flat.

With regards to domestic coal availability, although CIL is set to increase its production and dispatch in Q4 (post-monsoon), any significant replacement of imported coal by domestic coal seems unlikely due to high freight and quality issues.