Global coal demand was dealt a significant blow in April, as restrictions in many countries to curb the spread of Covid-19 slashed power demand and weighed heavily on industrial output.
Aggregate power generation or demand in France, Germany, India, Japan, Spain, Taiwan, Turkey, the UK, South Korea and Vietnam fell by nearly 77GW or 15pc on the year to 480GW, according to Argus estimates based on data obtained from power generation companies and grid operators. China's national bureau of statistics has not yet released power generation figures for April.
Most of the countries surveyed by Argus recorded steep annual declines in power output, ranging from 10-20pc, with the exception of Japan where generation slipped by only 3pc.
Many countries have not yet published coal-fired generation figures for April, but Argus estimates that aggregate coal burn among the 10 countries analysed fell by around 33GW on the year to 173GW, based on historical shares of the generation mix.
The drop is equivalent to around 8.9mn t less NAR 5,500kcal/kg coal consumption in 38pc efficient power plants in April, compared with a year earlier. This means the total drop in global coal demand last month was bigger than one month’s coal consumption in Japan – the world’s third-biggest importer.
The drop in April was also greater than the estimated 7.5mn t drop in coal consumption across the same countries during the first quarter of 2020.
India leads decline
India — the world's second-biggest coal consumer — recorded the biggest annual decline in power generation last month, in both relative and absolute terms. Industrial activity and power demand have been hit hard by a nationwide lockdown that was imposed on 25 March and extended by two weeks from today.
Average daily power generation fell by 19pc or 28GW compared with the three-year 2017-19 average in April, to around 118GW, data from the Central Electricity Authority (CEA) and grid operator Posoco show.
The CEA has not published coal-fired generation figures for April, but the drop in overall output implies a much steeper annual decline in coal burn than the 14GW fall recorded in March. Indian coal-fired output averaged 122GW in April last year and may have fallen below 100GW last month, assuming generation from other sources recorded similar proportional declines to the drop in total generation.
Industrial coal demand in India has also been affected by Covid-19, as economic output slowed considerably during the lockdown. The manufacturing purchasing managers index for India collapsed to 27.4 in April, from 51.8 in March, according to IHS Markit. This was the fastest decline on record, dating back more than 15 years.
Elsewhere in Asia-Pacific, the annual drop in power output was less severe.
In Japan, average power demand was broadly in line with the seasonal norm at 91GW, compared with the 2017-19 average of 92GW. The country's power demand held firm amid cooler weather conditions, despite the government declaring a state of emergency to slow the spread of Covid-19.
Japan's state of emergency has been extended until the end of May, which could weigh on power demand this month, but lower nuclear availability compared with 2019 may support coal burn in the near term. But coal-fired generation could face increasingly tough competition from LNG later in the year, as the cost of oil-indexed LNG imports is set to fall as a result of weaker oil prices.
South Korean power demand data for April is not yet available, but overall demand is estimated to have fallen by around 3GW on the year to 57GW, according to Argus analysis of daily peak power demand across the month.
But South Korean coal burn may still have risen on the year in April, as fewer coal plants were idled for maintenance and the fuel continues to price favourably against natural gas. Around 24GW of state-owned coal capacity was available last month, compared with only 20.5GW last year, according to data published by the Korean power exchange.
In Taiwan, total power generation was down by around 3GW from last year to 23GW, remaining at the same level as January-March. The country's coal-fired output fell by 550MW on the year to 9GW last month.
Coal burn falls sharply in the Atlantic
In the Atlantic basin, western European power generation registered one of the biggest year-on-year drops in recent history amid weaker economic activity.
Aggregate power generation in Germany, France, Spain and the UK averaged 142GW in April, compared with 171GW a year earlier. This weighed heavily on coal-fired generation, with German coal burn falling to only a third of where it stood a year earlier at around 1.5GW.
Average coal-fired generation across the four countries fell to 2.2GW from 6.2GW, implying 1.1mn t less NAR 5,800 kcal/kg coal consumption in 40pc-efficient power plants.
Turkish coal burn was relatively firm in the first quarter of the year as a result of stable power demand and favourable margins versus gas plants, but a sharp contraction in power demand cut coal consumption in April.
Overall power generation fell by a quarter on the year to an average of 26GW last month which, coupled with stronger hydro output, cut coal-fired generation to 3.4GW from 4.4GW last year.