In the start of 2020, it was reported that Pakistan’s coal imports are likely to surge to 30 MnT per annum by 2020, up from 20 MnT per annum last year amid planned expansions by cement manufacturers and new coal-based power plants set to come online soon, which would drive demand up significantly. However, with the unexpected turn of events due to COVID-19 pandemic, various countries and businesses have been impacted and supply chains have been disrupted.
With Pakistan being no exception to this, let us see how country’s coal imports dynamics have changed in first three months of 2020.
Increased presence of Indonesian and Russian Coal in Pakistan
According to the vessel-line up data maintained with CoalMint research, Pakistan’s first quarter (Jan-Mar) coal import shipments have registered a drop of about 10% y-o-y basis from 3.97 MnT in Q1 2019 to 3.59 MnT in Q1 2020.
A change in trend can be seen in Pakistan’s country-wise coal imports with increasing share of Indonesia and Russia in Pakistan’s coal imports.
While South Africa continued to remain the top coal supplier to the country with exports standing at 1.69 MnT in Q1 CY20 against 2.96 MnT in Q1 CY19 (drop of 42% y-o-y basis), Pakistan’s coal imports from Indonesia increased by 22% y-o-y basis from 0.9 MnT in Q1 CY19 to 1.12 MnT in Q2 CY20. Apart from this Pakistan’s coal imports from Russia has seen a jump of 122% in first quarter of CY20 from 55,344 tonne in Q1 CY19 to 0.73 MnT in Q1 CY20.
With Chinese industries being shut almost for two months due to COVID-19, Indonesia which is China’s biggest coal supplier diverted their coal produce to other Asian countries including Pakistan that led to its increased presence in the former’s coal market. The increased availability of Indonesian coal made the buyers in Pakistan to prefer the same over South African coal given the lower freight and lesser transit time in case of Indonesia against South Africa.
Apart from this the reduced coal usage in Europe, fall in transportation cost and unregulated port handling charges has motivated Russian coal exporters to target the Asian countries for exports that have become prime coal export destination over past few years.
If we analyse the country’s sector-wise coal imports, the power sector’s coal imports have surged by 11% y-o-y from 1.79 MnT in Q1 CY19 to 1.99 MnT in Q1 CY20. Whereas, cement sector’s imports have plunged by 28% y-o-y basis from 1.17 MnT in Q1 CY19 to 0.85 MnT in Q1 CY20.
Pakistan’s coal imports rise in March 2020
Pakistan’s coal import shipment for the month of March 2020 has recorded a surge of 6% m-o-m basis as the same stood at 1.23 MnT in Mar’20 against 1.16 MnT in Feb’20.
The country’s coal imports from South Africa stood at 0.42 MnT (down by 38% m-o-m), from Indonesia at 0.42 MnT (up by 101% m-o-m) and imports from Russia were recorded at 0.39 MnT (up by 77% m-o-m).
Looking at the sector-wise coal imports of Pakistan, power and cement sector topped the list with 0.70 MnT (up by 12% m-o-m) and 0.30 MnT (up by 38% m-o-m) of coal imports respectively.
According to the market sources, the COVID-19 fear that has engulfed the entire world over past three months had made the industry participants in Pakistan to stock up coal in the month of March in anticipation that the exporting countries may seal their borders in case the number of pandemic cases rise globally.
What lies ahead?
According to the market reports, Pakistan has announced lockdown in few provinces and sealed borders with countries like Iran and Afghanistan amid the rising cases of COVID-19 in the country resulting which barring essential commodities all other factory units have been closed.
Thus, in the given scenario, Pakistan’s cement industry is being adversely impacted which will further lower down the country’s coal requirement. While the export dispatches to Afghanistan are being suspended, producers are seeing a fall in local cement demand, with lockdown of the port cities of Karachi and Sindh province. The other three provinces are partially locked down and this is expected to affect local dispatches.
In case of the power sector, the country’s electricity consumption had plummeted by almost 30% and authorities had been compelled to provide uninterrupted power supply to even high-loss areas to maintain frequency. Also, in the coming month of April, the country’s power consumption is going to suffer due to lockdown forcing industries, offices and commercial activities to shut down which will ultimately impact its coal demand and hence, adversely affecting imports in the upcoming month ahead.
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