💡What is Cu?
📝Copper (Cu) is a soft, malleable and ductile metal with high thermal and electrical conductivity
📝The last two qualities of Cu determine its main industrial usage – as a wire. Therefore, copper used in all industrial goods that require electricity conductors. Copper is thus an essential metal for grid infrastructure, refrigerators, air conditioners and other housing equipment. Moreover, all vehicle wiring is also made of copper
#copper
📝Copper (Cu) is a soft, malleable and ductile metal with high thermal and electrical conductivity
📝The last two qualities of Cu determine its main industrial usage – as a wire. Therefore, copper used in all industrial goods that require electricity conductors. Copper is thus an essential metal for grid infrastructure, refrigerators, air conditioners and other housing equipment. Moreover, all vehicle wiring is also made of copper
#copper
⛏Copper mine production market
📌The copper mining process is similar to that of other metals: copper-containing ore is extracted from open pits or underground mines. After extraction, ore (~1% Cu) is processed by one of two main methods: pyrometallurgical (for sulphide ores) and hydrometallurgical – SX/EW – (for oxide ores). The final product of SX/EW is copper cathode (99.99% Cu). Copper concentrate (25-35% Cu), obtained using the pyrometallurgical method, must be smelted to reach 99% Cu. Given the pyrometallurgical process accounts for roughly 75% of world output, it creates, besides the mined copper market, a refined copper market (see details later)
🇨🇱🇵🇪Chile and Peru are the main producers of mined copper, at 27% and 11% of global mine supply, respectively. While we expect mined copper supply to grow 4% CAGR in 2021-2025, we note downside risks associated with the actions of the local authorities, such as nationalisation of copper mines in Chile and the mine tax increase in Peru
#copper
📌The copper mining process is similar to that of other metals: copper-containing ore is extracted from open pits or underground mines. After extraction, ore (~1% Cu) is processed by one of two main methods: pyrometallurgical (for sulphide ores) and hydrometallurgical – SX/EW – (for oxide ores). The final product of SX/EW is copper cathode (99.99% Cu). Copper concentrate (25-35% Cu), obtained using the pyrometallurgical method, must be smelted to reach 99% Cu. Given the pyrometallurgical process accounts for roughly 75% of world output, it creates, besides the mined copper market, a refined copper market (see details later)
🇨🇱🇵🇪Chile and Peru are the main producers of mined copper, at 27% and 11% of global mine supply, respectively. While we expect mined copper supply to grow 4% CAGR in 2021-2025, we note downside risks associated with the actions of the local authorities, such as nationalisation of copper mines in Chile and the mine tax increase in Peru
#copper
What is happening on the refined copper market?
📝China, the major consumer of industrial metals, accounts for 54% of global Cu demand. 43% of refined Cu is produced in China. Refined Cu is obtained from Cu concentrate that is shipped to China, mainly from Chile and Peru (27% and 11% of world mined Cu output, respectively)
📈In 2021, refined Cu supply was 24mnt, rising 9% over the previous 5 years, as a 32% increase in China’s refined Cu output offset the rest of the world’s decline. Global refined supply might further rise 16% by 2026 (3% 2021-26 CAGR) on the back of growing China’s refining capacities
💵For producing refined Cu from concentrate, refineries charge TC/RCs – treatment and refining charges. The dynamics of TC/RCs signals changes in the concentrate market balance. In April, the average spot TC/RCs were USD 83/t, up 17% MoM, which might imply a move toward a concentrate surplus, caused by lower availability of refining capacity amid COVID-19 lockdowns in China and rising costs
#copper
📝China, the major consumer of industrial metals, accounts for 54% of global Cu demand. 43% of refined Cu is produced in China. Refined Cu is obtained from Cu concentrate that is shipped to China, mainly from Chile and Peru (27% and 11% of world mined Cu output, respectively)
📈In 2021, refined Cu supply was 24mnt, rising 9% over the previous 5 years, as a 32% increase in China’s refined Cu output offset the rest of the world’s decline. Global refined supply might further rise 16% by 2026 (3% 2021-26 CAGR) on the back of growing China’s refining capacities
💵For producing refined Cu from concentrate, refineries charge TC/RCs – treatment and refining charges. The dynamics of TC/RCs signals changes in the concentrate market balance. In April, the average spot TC/RCs were USD 83/t, up 17% MoM, which might imply a move toward a concentrate surplus, caused by lower availability of refining capacity amid COVID-19 lockdowns in China and rising costs
#copper
🏢China property completions decreased 14% YoY April
• The rate of decline was roughly in line with the 15% YoY drop in March
• Property completions are dropping on the back of China’s real estate crisis, which has been exasperated by COVID-19 lockdowns despite the strong floor space starts in recent years
• Meanwhile, China’s floor space starts were down 44% YoY in April (vs. 22% YoY decline in March)
❗️Weak property starts and completions are negative for the demand for industrial metals. However, we note that Chinese banks cut the five-year loan prime rate (a reference for home mortgages) to 4.45% from 4.6%, which might support the property market in the coming months
#China #steel #aluminium #copper
• The rate of decline was roughly in line with the 15% YoY drop in March
• Property completions are dropping on the back of China’s real estate crisis, which has been exasperated by COVID-19 lockdowns despite the strong floor space starts in recent years
• Meanwhile, China’s floor space starts were down 44% YoY in April (vs. 22% YoY decline in March)
❗️Weak property starts and completions are negative for the demand for industrial metals. However, we note that Chinese banks cut the five-year loan prime rate (a reference for home mortgages) to 4.45% from 4.6%, which might support the property market in the coming months
#China #steel #aluminium #copper
🥉Cu demand composition and prospects
📝As copper is mainly used in infrastructure and industrial goods, global demand for Cu is highly correlated with the overall state of the world economy and GDP growth. Over the last 5 years, copper demand has been growing at a CAGR of 1.7%, as Chinese demand (4.6% CAGR, >50% of global demand) has offset stagnant consumption in the rest of the world
🏗China’s ambitious state grid infrastructure investment programme for 2021-2025 (in 2022, investments into the grid are to grow 3% YoY and 7% vs. 2020) is supportive for medium-term copper demand. However, weak construction data this year is likely to offsetting positive effect from use in the grid
☘️Renewables and EVs, despite being good LT prospects for Cu, has had a limited effect on demand so far. Per CRU, renewables account for only 4% of global copper consumption (with the share likely to remain at this level in the medium-term). EVs accounted for 1.5% of global demand in 2021; the share is to expand to 4% in 2025
📝As copper is mainly used in infrastructure and industrial goods, global demand for Cu is highly correlated with the overall state of the world economy and GDP growth. Over the last 5 years, copper demand has been growing at a CAGR of 1.7%, as Chinese demand (4.6% CAGR, >50% of global demand) has offset stagnant consumption in the rest of the world
🏗China’s ambitious state grid infrastructure investment programme for 2021-2025 (in 2022, investments into the grid are to grow 3% YoY and 7% vs. 2020) is supportive for medium-term copper demand. However, weak construction data this year is likely to offsetting positive effect from use in the grid
☘️Renewables and EVs, despite being good LT prospects for Cu, has had a limited effect on demand so far. Per CRU, renewables account for only 4% of global copper consumption (with the share likely to remain at this level in the medium-term). EVs accounted for 1.5% of global demand in 2021; the share is to expand to 4% in 2025
❓Copper producers: are there any picks?
💰Most copper producers look expensive at current mults:SCCO historically trades significantly above its peers and is now at 6x 1-y fwd EV/EBITDA on spot, while FCX, FM and ERO also look unattractive, trading at 4.6-5.3x EV/EBITDA. These companies generate 6-12% FCF yields, with FCX and SCCO offering a 6-7% dividend yield. Other producers such as ANTO and MMG look neutral on spot, trading at 4x EV/EBITDA and offering a 10-20% FCF yield. As we do not expect copper prices to rise in the coming months, we find these stocks unattractive
📈However, GLEN and TECK are interesting options from the copper producer segment. These companies provide exposure to energy (GLEN garners 30% of its revenue from thermal coal, TECK gets 60% of its revenue from coking coal). GLEN and TECK trade at 1.6-2.3x (if the assuming copper segment trades at 5x EV/EBITDA, other businesses – incl. energy – trade at 1x and 1.7x, respectively). Thus, these stocks are worth paying attention to
#copper
💰Most copper producers look expensive at current mults:SCCO historically trades significantly above its peers and is now at 6x 1-y fwd EV/EBITDA on spot, while FCX, FM and ERO also look unattractive, trading at 4.6-5.3x EV/EBITDA. These companies generate 6-12% FCF yields, with FCX and SCCO offering a 6-7% dividend yield. Other producers such as ANTO and MMG look neutral on spot, trading at 4x EV/EBITDA and offering a 10-20% FCF yield. As we do not expect copper prices to rise in the coming months, we find these stocks unattractive
📈However, GLEN and TECK are interesting options from the copper producer segment. These companies provide exposure to energy (GLEN garners 30% of its revenue from thermal coal, TECK gets 60% of its revenue from coking coal). GLEN and TECK trade at 1.6-2.3x (if the assuming copper segment trades at 5x EV/EBITDA, other businesses – incl. energy – trade at 1x and 1.7x, respectively). Thus, these stocks are worth paying attention to
#copper
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📌China’s ROM iron ore output declined 1.3% YoY in April, reversing from the 15.9% YoY increase in March
• The drop might have been caused by the weak iron ore demand amid lockdowns: China’s crude steel output declined 5.2% YoY in April
❗️As we wrote earlier, China’s plan to keep the 2022 steel output below the 2021 level might force steel producers to reduce their output run-rate in the coming months, which might lead to a further reduction in iron ore demand
#iron_ore
• The drop might have been caused by the weak iron ore demand amid lockdowns: China’s crude steel output declined 5.2% YoY in April
❗️As we wrote earlier, China’s plan to keep the 2022 steel output below the 2021 level might force steel producers to reduce their output run-rate in the coming months, which might lead to a further reduction in iron ore demand
#iron_ore
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💍Richemont jewellery segment sales were up 30% YoY in 1Q22
• The growth rate decelerated from 41% YoY in 4Q21
• According to the company, the increase was mostly driven by the growing sales in the Americas region. However, management noted that the business environment had deteriorated and there was a high degree of uncertainty toward future sales.
❗️Jewellery demand momentum is persisting, thereby providing support for diamond price growth; however, we do not rule out a significant slowdown in near future
#diamonds
• The growth rate decelerated from 41% YoY in 4Q21
• According to the company, the increase was mostly driven by the growing sales in the Americas region. However, management noted that the business environment had deteriorated and there was a high degree of uncertainty toward future sales.
❗️Jewellery demand momentum is persisting, thereby providing support for diamond price growth; however, we do not rule out a significant slowdown in near future
#diamonds
☢️The President of Uzbekistan has ordered the development of 8 new uranium deposits in the country over 2022-2026
• The government has provided neither the reserves contained within the deposits nor their potential production capacity
❗️This might be slightly negative for uranium prices in the long term
📝Uzbekistan accounts for 7% of global uranium production and for 2% of world uranium resources, according to World Nuclear Association
#uranium
• The government has provided neither the reserves contained within the deposits nor their potential production capacity
❗️This might be slightly negative for uranium prices in the long term
📝Uzbekistan accounts for 7% of global uranium production and for 2% of world uranium resources, according to World Nuclear Association
#uranium
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📌China’s coking coal imports rose 22% YoY in April, reversing from the 23% YoY decline in March
· According to Metal Expert, the country has increased its imports in order to avoid coking coal deficit amid limited volumes on the global market
· The increase was mainly driven the 125% YoY (up 20% MoM) growth of imports from Russia (40% of total) and the 112% YoY increase in imports from Mongolia (31% of total)
❗️We note that China’s coking coal imports might be under pressure in the coming months due to the potential decrease in steel production
#China #coal
· According to Metal Expert, the country has increased its imports in order to avoid coking coal deficit amid limited volumes on the global market
· The increase was mainly driven the 125% YoY (up 20% MoM) growth of imports from Russia (40% of total) and the 112% YoY increase in imports from Mongolia (31% of total)
❗️We note that China’s coking coal imports might be under pressure in the coming months due to the potential decrease in steel production
#China #coal
🚘China plans to offer tax relief worth CNY 60bn (USD 9bn) on passenger-car purchases
· By implementing such measures, China hopes to support the automotive market, which has been hit by the COVID-related lockdowns: in April, China’s internal combustion engine car sales dropped 57% YoY
❗️The tax rebate might be slightly positive for PGM demand as China’s automotive sector accounts for some 26% and 17% of global autocatalyst palladium and platinum demand, respectively
#China #cars
· By implementing such measures, China hopes to support the automotive market, which has been hit by the COVID-related lockdowns: in April, China’s internal combustion engine car sales dropped 57% YoY
❗️The tax rebate might be slightly positive for PGM demand as China’s automotive sector accounts for some 26% and 17% of global autocatalyst palladium and platinum demand, respectively
#China #cars
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📌India has raised export duties on iron ore concentrates from 30% to 50%
• Export tariffs on iron ore pellets were increased to 45% from zero
• The move was aimed at reducing India’s domestic steelmaking costs
• According to multiple Indian industry sources, the higher tariffs might result in reduction of the country’s iron ore exports to almost zero
❗️Given India accounted for 2% of global iron ore exports in 2021, this might slightly support iron ore prices
#iron_ore
• Export tariffs on iron ore pellets were increased to 45% from zero
• The move was aimed at reducing India’s domestic steelmaking costs
• According to multiple Indian industry sources, the higher tariffs might result in reduction of the country’s iron ore exports to almost zero
❗️Given India accounted for 2% of global iron ore exports in 2021, this might slightly support iron ore prices
#iron_ore
📌Global crude steel output fell 5% YoY to 163mnt in April
• The decrease was partially driven by the 5% YoY decline in China's steel output, which accounted for 57% of world steel production in April (vs. 55% in March)
• Ex-China steel production fell 5% YoY in April (as well as in March)
• US steel production was down 4% YoY in April (vs. 2% YoY decline in March), while EU crude steel output decreased 5% YoY in April, with the rate of decline decelerating from 9% YoY in March
❗️In our view, global steel production might continue to decline in the coming months due to the global economic slowdown and China’s plans to reduce steel output relative to the 2021 level. Falling steel production is primarily negative for iron ore demand
#steel
• The decrease was partially driven by the 5% YoY decline in China's steel output, which accounted for 57% of world steel production in April (vs. 55% in March)
• Ex-China steel production fell 5% YoY in April (as well as in March)
• US steel production was down 4% YoY in April (vs. 2% YoY decline in March), while EU crude steel output decreased 5% YoY in April, with the rate of decline decelerating from 9% YoY in March
❗️In our view, global steel production might continue to decline in the coming months due to the global economic slowdown and China’s plans to reduce steel output relative to the 2021 level. Falling steel production is primarily negative for iron ore demand
#steel
Nornickel’s forecast of 0.1mnoz Pd market deficit and 0.9mnoz Pt market surplus in 2022 might be challenging
· The company has assumed 3% YoY Pd demand growth in 2022 on the back of a 5% YoY recovery in car production. This seems a challenge, given Chinese, EU and US car sales fell 24% YoY, 13% YoY and 16% YoY in 4mo22, respectively
· According to Nornickel, 2022 Pt market surplus might be driven by lower Pt loadings in China’s cars and a falling share of diesel in EU car sales
· We note that if car sales continue to decline at April rates, Pd and Pt markets might be in surplus of 23% and 27% of demand in 2022, respectively (vs. Nornickel’s forecast of 1% deficit and 13% surplus, respectively)
#PGMs
· The company has assumed 3% YoY Pd demand growth in 2022 on the back of a 5% YoY recovery in car production. This seems a challenge, given Chinese, EU and US car sales fell 24% YoY, 13% YoY and 16% YoY in 4mo22, respectively
· According to Nornickel, 2022 Pt market surplus might be driven by lower Pt loadings in China’s cars and a falling share of diesel in EU car sales
· We note that if car sales continue to decline at April rates, Pd and Pt markets might be in surplus of 23% and 27% of demand in 2022, respectively (vs. Nornickel’s forecast of 1% deficit and 13% surplus, respectively)
#PGMs
Nornickel has reiterated its nickel market surplus forecast of 40kt in 2022
· Nornickel sees an 11% YoY demand growth in 2022, highlighting 2 demand drivers. Firstly, the company expects a 9% YoY stainless steel production growth, which, in our view, might be difficult to achieve as 1Q22 global stainless steel output declined 4% YoY. Secondly, Nornickel forecasts a 27% YoY increase in nickel use in batteries, which looks conservative as China and EU EV sales were up 156% YoY and 24% YoY in 1Q22, respectively
· Nornickel sees a 19% YoY increase in refined nickel supply in 2022. This might be driven by the forecasted 33% YoY growth of Indonesian NPI output and rising production of nickel compounds for EV batteries. This outlook seems reasonable as Indonesian NPI output was up 34% YoY in 1Q22
· The company expects Indonesia’s NPI output growth to continue in 2023, widening nickel market surplus to 100kt
#nickel
· Nornickel sees an 11% YoY demand growth in 2022, highlighting 2 demand drivers. Firstly, the company expects a 9% YoY stainless steel production growth, which, in our view, might be difficult to achieve as 1Q22 global stainless steel output declined 4% YoY. Secondly, Nornickel forecasts a 27% YoY increase in nickel use in batteries, which looks conservative as China and EU EV sales were up 156% YoY and 24% YoY in 1Q22, respectively
· Nornickel sees a 19% YoY increase in refined nickel supply in 2022. This might be driven by the forecasted 33% YoY growth of Indonesian NPI output and rising production of nickel compounds for EV batteries. This outlook seems reasonable as Indonesian NPI output was up 34% YoY in 1Q22
· The company expects Indonesia’s NPI output growth to continue in 2023, widening nickel market surplus to 100kt
#nickel
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📌The Ministry of Industry and Trade expects Russia’s steel demand to fall by less than 10% YoY in 2022
• According to the Ministry, domestic steel demand might be supported by the realisation of national projects and by the development of the construction industry
• Previously, the Russian Steel Association had forecasted a 30% YoY drop in Russian domestic steel demand in 2022
📝In 1Q22, Russian apparent steel consumption was up 13% YoY. However, we note that it might be pressured in the subsequent quarters
#steel #rusteel
• According to the Ministry, domestic steel demand might be supported by the realisation of national projects and by the development of the construction industry
• Previously, the Russian Steel Association had forecasted a 30% YoY drop in Russian domestic steel demand in 2022
📝In 1Q22, Russian apparent steel consumption was up 13% YoY. However, we note that it might be pressured in the subsequent quarters
#steel #rusteel
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📌CISA mills’ daily crude steel output fell 0.3% in the middle of May from the first ten days of the month
• This represented a 3.4% YoY drop (vs. the 4.7% YoY decrease in early May)
• The continued steel output decline in China might have been due to the weakening steel demand, shown by the 6.6% increase in inventories from 10 to 20 May (up 36.5% YoY)
📉We see a downward trend in China’s steel output over the coming months as steel manufacturers are likely to be forced to lower their production run-rates by further 9%+ in order to achieve the targeted steel output reduction in 2022 relative to 2021
#China #steel
• This represented a 3.4% YoY drop (vs. the 4.7% YoY decrease in early May)
• The continued steel output decline in China might have been due to the weakening steel demand, shown by the 6.6% increase in inventories from 10 to 20 May (up 36.5% YoY)
📉We see a downward trend in China’s steel output over the coming months as steel manufacturers are likely to be forced to lower their production run-rates by further 9%+ in order to achieve the targeted steel output reduction in 2022 relative to 2021
#China #steel
☢️China’s nuclear power generation was up 1% YoY in April
· The growth rate decelerated from 2% YoY in March and 7% YoY in 1Q22
· The weaker growth rate might have been caused by the lower electricity demand amid COVID-related lockdowns in China, which resulted in a 4% YoY drop in the country’s overall electricity generation in April
📝China accounts for 13% of global nuclear power generation capacity and for 15% of world uranium demand
· As we wrote previously, China plans to increase its nuclear generation capacity by 38% from the current level by 2025. The increase accounts for 5% of global nuclear power capacity. This might support the long-term uranium demand
#China #uranium
· The growth rate decelerated from 2% YoY in March and 7% YoY in 1Q22
· The weaker growth rate might have been caused by the lower electricity demand amid COVID-related lockdowns in China, which resulted in a 4% YoY drop in the country’s overall electricity generation in April
📝China accounts for 13% of global nuclear power generation capacity and for 15% of world uranium demand
· As we wrote previously, China plans to increase its nuclear generation capacity by 38% from the current level by 2025. The increase accounts for 5% of global nuclear power capacity. This might support the long-term uranium demand
#China #uranium
🔗Rusal – major beneficiary of aluminium cost growth
📌As we expected, marginal Al cash costs have continued to rise, adding 15% since the start of May, backed by all time high coal prices. At the same time, Al prices fell 23% from peak, pressured by declining demand from the auto and property sectors. As such, coal-based Al producers are now deeply loss-making, losing >$1,000/t on spot prices. This is abnormal and highly likely to provide major support for Al prices, creating opportunities for producers that operate with fixed-cost sources of energy
❗UC Rusal is well positioned in this environment, as 95%+ energy comes from the hydropower plants of its parent company EN+. At spot, Rusal’s aluminium int. cash cost of c. $2,100/t is c.20% lower than marginal Al coal-based producer spends only on coal purchases. Rusal offers attractive 27% FCF yields at spot prices, trading at 1.6x EV/EBITDA. In a bull case, if Al prices pick up with marginal costs, Rusal’s FCF yield would surge >60%
#aluminium
📌As we expected, marginal Al cash costs have continued to rise, adding 15% since the start of May, backed by all time high coal prices. At the same time, Al prices fell 23% from peak, pressured by declining demand from the auto and property sectors. As such, coal-based Al producers are now deeply loss-making, losing >$1,000/t on spot prices. This is abnormal and highly likely to provide major support for Al prices, creating opportunities for producers that operate with fixed-cost sources of energy
❗UC Rusal is well positioned in this environment, as 95%+ energy comes from the hydropower plants of its parent company EN+. At spot, Rusal’s aluminium int. cash cost of c. $2,100/t is c.20% lower than marginal Al coal-based producer spends only on coal purchases. Rusal offers attractive 27% FCF yields at spot prices, trading at 1.6x EV/EBITDA. In a bull case, if Al prices pick up with marginal costs, Rusal’s FCF yield would surge >60%
#aluminium
📌Global aluminium producers: valuation update
💰As we noted previously, aluminium producers that operate with fixed-cost sources of energy look better amid rising energy costs. However, among global producers only S32 appears interesting on spot, despite having lower share of fixed-cost sources of energy (17%) than its peers. S32 benefits from rising coking coal prices (up 49% YTD) and offers 19% 1-y fwd FCF and dividend yields, trading at 2.5x 1-y fwd EV/EBITDA (vs. 5-18x EV/EBITDA of peers)
💰NHY looks neutral at spot despite relatively high level of fixed-cost sources of energy (50%). The company trades at 5x EV/EBITDA and offers just 5-7% FCF and dividend yields (vs. 1.6x of Rusal’s EV/EBITDA)
💰Chinese aluminium producers (Hongqiao and Chalco) and American Alcoa, meanwhile, are loosing from rising energy costs. Companies trade at 5-18x EV/EBITDA and offer less than 2% dividend yield
#aluminium $S32
💰As we noted previously, aluminium producers that operate with fixed-cost sources of energy look better amid rising energy costs. However, among global producers only S32 appears interesting on spot, despite having lower share of fixed-cost sources of energy (17%) than its peers. S32 benefits from rising coking coal prices (up 49% YTD) and offers 19% 1-y fwd FCF and dividend yields, trading at 2.5x 1-y fwd EV/EBITDA (vs. 5-18x EV/EBITDA of peers)
💰NHY looks neutral at spot despite relatively high level of fixed-cost sources of energy (50%). The company trades at 5x EV/EBITDA and offers just 5-7% FCF and dividend yields (vs. 1.6x of Rusal’s EV/EBITDA)
💰Chinese aluminium producers (Hongqiao and Chalco) and American Alcoa, meanwhile, are loosing from rising energy costs. Companies trade at 5-18x EV/EBITDA and offer less than 2% dividend yield
#aluminium $S32
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📌India plans to increase coal imports to ease shortages
• India’s coal producers are struggling to meet rising domestic coal demand, fuelled by increased electricity consumption amid high temperatures in the region
• According to Reuters, in late May, coal inventories at India’s power plants decreased 13% MoM, amounting to 8 days of coal requirements
• India’s Power Industry expects the country’s coal deficit to reach 43mnt (or 22% of the domestic demand) in 3Q22
❗️The potential increase in India’s coal imports might be positive for Russia’s coal exports, which are relatively cheap. Currently, Russia’s East thermal coal FOB price (6,000kcal) is 67% below the FOB Newcastle and 58% below the FOB Richards Bay benchmarks
#coal
• India’s coal producers are struggling to meet rising domestic coal demand, fuelled by increased electricity consumption amid high temperatures in the region
• According to Reuters, in late May, coal inventories at India’s power plants decreased 13% MoM, amounting to 8 days of coal requirements
• India’s Power Industry expects the country’s coal deficit to reach 43mnt (or 22% of the domestic demand) in 3Q22
❗️The potential increase in India’s coal imports might be positive for Russia’s coal exports, which are relatively cheap. Currently, Russia’s East thermal coal FOB price (6,000kcal) is 67% below the FOB Newcastle and 58% below the FOB Richards Bay benchmarks
#coal