Pakistan has posted a 14.5% month-on-month (m-o-m) decline in thermal coal imports in Jun’21 to 1.5 million tonnes (mn t) against 1.7 mn t in May, CoalMint’s vessel-line up data reveals.
While imports from Indonesia fell by 36% m-o-m to 0.3 mn t and from South Africa were at 0.9 mn t, down 10.5% m-o-m.
Price surge in Indonesian and South African coal
Despite rising electricity demand, thermal coal imports from both the countries fell in Jun’21 due to a sharp rise in coal prices in that country last month amid supply tightness and robust Chinese demand.
Indonesian 5500 GAR coal has risen by 11% m-o-m, whereas South African 5500 NAR coal has moved up by 5% in Jun’21.
The Federal Minister for Energy, Hammad Azhar, recently announced that the consumption of electricity by domestic users in the country has increased by 6-7%, while consumption by industries has swelled by around 15% compared with last year.
Amid rising blackouts in Pakistan during the summer season and rise in imported coal prices, the country has been trying to restore supply of liquefied natural gas.
Owing to a fall in gas production, power generation via coal and liquified natural gas has increased.
Coal imports from Australia goes up
Pakistan’s coal imports from Australia observed a significant rise to 0.12 mn t in June as Australian 5,500 NAR coal was cheaper by $15/t against high-CV Indonesian and South African coal.
The only concern that deterred coal buyers in Pakistan from procuring more coal from Australia was escalated freight rates.
Pakistan has been sourcing Russian thermal coal since the last two months as Russian coal that had arrived in China were being redirected to Chinese utilities in Pakistan, confirmed market sources. Thermal coal imports from the country jumped 28% to 0.23 mn t.
Over the last few months, Russia has been increasingly focusing on coal shipments to Asian markets.
Cement demand remains upbeat in Pakistan
Pakistan’s cement sector, one of the biggest consumers of thermal coal besides power sector, posted a m-o-m increase in sales to 5.2 mn t in Jun’21 against 3.2 mn t in May, data from the All Pakistan Cement Manufacturers Association revealed.
Total cement sales were at 57.4 mn t in FY’21, up 20.1% y-o-y.
Owing to the sharp rise in South African coal and Indonesian coal prices, the domestic cement buyers in Pakistan were heard to be purchasing domestic coal. The country mainly has lignite reserves.
Although the domestic coal sector is not regulated in Pakistan, given escalated freight rates and imported material cost, coal users are looking for procurement even from neighboring country, Afghanistan.
Rising economic momentum in Pakistan, along with the government’s flagship housing scheme that envisages construction of five million houses for the economically backward populace, are seen driving cement demand.
As per industry reports, the country’s cement industry has been aiming to expand capacity from 70 mn t to around 100 mn t/year in the hope that demand will increase by 15% on an annual basis over the next three years.
Outlook
In the near-term, increasing economic activities in Pakistan are expected to propel coal imports.
However, any sharp rise in imports in the coming months also seems unlikely as rising coal prices are compelling utilities to switch to renewable energy and alternative fuels for power generation.
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