Pakistan’s thermal coal imports for Oct’20 have been recorded at 1.40 mn t against 1.29 mn t in the previous month, vessel line-up data with CoalMint revealed.
This increase in imports can be attributed to dramatic surges in Pakistan’s coal imports from Australia which stood at 0.29 mn t in Oct’20 against 0.06 mn t in Sep’20.
Australian coal diverted to other destinations
After the news of China giving verbal notice to its utilities to stop Australian coal imports came out, many Australian sellers and Chinese buyers opted for distressed selling of already booked Australian thermal coal cargo at cheaper rates.
CoalMint’s data reveals that, coal imports by Pakistan’s cement industry jumped by 72% m-o-m in October to 0.71 mn t. High CV Australian coal is usually used by the cement sector.
Apart from this, industry experts believe that country’s cement dispatch for Oct’20 increased by 30% to 5.5 mn t due to increase in domestic and export demand as well as Pakistan economy’s improvement.
Dynamics changed in the case of imports from other countries
In case of imports from other countries, imports from South Africa also recorded a rise of 14% m-o-m in Oct’20 at 0.89 mn t as the same was also available at cheaper rates like Australian coal.
On the other hand, thermal coal imports from Indonesia reduced by 50% m-o-m at 0.22 mn t as Indonesian coal sellers were back focusing on China after the new quotas of 5 mn t were announced by north eastern province Jilin from Oct to the end of this year.
Pakistan’s coal imports by power sector dropped by 26% m-o-m to 0.42 mn t, whereas, imports by traders also fell by 58% m-o-m to 0.08 mn t in October.
Outlook ahead
While Australian thermal coal prices would gain some momentum in November (currently RB2, 5500 NAR is at $ 55/t CFR) against previous month, it would still be a preferred option for buyers in Pakistan. This is because it is still cheaper against South African coal prices (currently 5500 NAR is $65/t, CFR Pakistan).
Also, the outlook for cement sector looks quite positive in Pakistan due to lower international oil and coal prices (energy cost savings) and a steep decline in interest rates by the Central Bank of Pakistan.
In case of power sector, the country’s government has announced major relief package where SMEs are given 50% discount on additional power use and all other industries are given 25%. This would promote more industrial production resulting in more power and subsequent coal demand.
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