Pakistan’s thermal coal import shipments recorded a sharp fall of 38% month-on-month (m-o-m) to 0.7 mnt in June, CoalMint vessel line-up data revealed.
The sharp fall in imports came as elevated global coal prices continued to weigh on buying appetite forcing end-users to look for coal sourcing from local mines, non-traditional destinations and/or neighbouring countries like Afghanistan.
In the latest development, the Pakistani government has allowed entities to import Afghan coal in their local currency. Afghanistan has also agreed to carry out the trade in Pakistani currency as the country is already facing severe lack of foreign investments in the mining sector due to sanctions by the USA on the country’s interim government.
In June, shipments from South Africa and Indonesia both fell on a monthly basis.
There were no shipments from Russia over the last two months amid strong demand from the Chinese market. Cheaper coal from Russia compelled Chinese traders to lessen imports from other destinations.
During FY’22 ended 30 June, Pakistan’s thermal coal imports fell sharply by 20% y-o-y to 13 mnt. Shipments from South Africa recorded the highest decline, while shipments from the USA and Mozambique grew due to competitive prices.
Trade balancing
*Qty in mnt
South African coal imports plunge
Shipments from South Africa have been on a declining trend owing to elevated prices since last year. Strong European demand for South African coal continues to dent the buying capacity of Pakistani cement manufacturers.
Cement dispatches from the country remained under pressure last year as data during the first 11 months of FY’22 showed a 9% y-o-y fall to 48 mnt (both in the domestic and export markets), data from the All Pakistan Cement Manufacturers Association revealed.
The country’s cement sector has increasingly shifted its focus to procurement from neighbouring Afghanistan.
Shipments from Indonesia fall over 40%
Pakistan’s coal imports from Indonesia fell sharply by 43% last month as elevated fuel prices and a strengthening dollar made power generation a costly affair for Pakistan.
Amid coal shortage and high LNG prices, the country is facing power outages and 12-hour long blackouts. In an attempt to save energy, Pakistan’s government has cut working hours for public servants and ordered shopping malls and factories to shut early in various cities, including Karachi.
Outlook
Pakistan’s coal imports from traditional destinations are likely to change in the coming month, with rising demand for coal from Afghanistan and Tajikistan. With declining foreign reserves of the country and the depreciating Pakistani rupee, the prospect for any major spurt in imports remains capped in the near term.
To know more about the changing trade dynamics of Asian markets join us at India Coal Outlook Conference. CoalMint will be hosting the India Coal Outlook Conference on 3-4 August 2022 at The Lalit, New Delhi, to discuss the key issues pertaining to domestic coal production and supply, the government’s objective of controlling imports and domestic supply gap affecting many industries, the need to increase the purchasing power of Indian steel companies in the volatile global coking coal market as well as issues related to decarbonization of the coal value chain.
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