Vietnam January coal imports up but virus hits outlook

Vietnam's coal imports increased in January compared with a year earlier, but growth eased from December as electricity generation dipped. And a slowdown in industrial activity because of the coronavirus outbreak could weigh on the near-term outlook for imports.

Vietnam imported 3.33mn t of coal in January, up by 7.4pc from 3.1mn t a year earlier, according to provisional Vietnamese customs data. The data do not differentiate between coking and thermal coal.

But growth softened compared with a month earlier amid weaker industrial activity. Vietnam's coal imports had grown by 51pc on the year in December 2019, to 4.3mn t.

Vietnam's industrial production declined by 5.5pc from a year earlier in January, after rising by 6.2pc year on year in December 2019, according to the general statistics office (GSO). Last month's drop was mainly the result of the lunar new year holiday, which reduced the number of working days in January.

Vietnam's electricity generation dipped to 16.8TWh last month, down from 17.6TWh a year earlier and 18.5TWh in December 2019, according to GSO data.

The near-term outlook is uncertain, as the coronavirus outbreak affects business activity in the country. The Vietnam Chamber of Commerce and Industry has warned that industrial production could fall in January-March on the prospect of weaker factory output and faltering import and export activity.

But the country's trade and industry ministry said the economy is fundamentally on a firm footing. Vietnam's GDP grew by 6.97pc year on year in October-December 2019 while overall growth for 2019 was 7.02pc, exceeding a 6.8pc government target.

Vietnam's economic expansion has supported electricity generation, as total power supply - including generation and purchases by state-owned utility EVN - reached 231.1TWh last year, an increase of 8.85pc from 2018. EVN has set a target to increase generated and purchased power output by 8.9pc to 251.62TWh for 2020.

Australian coal accounted for much of last month's increase in imports, with receipts of all grades of coal from Australia gaining by 277,763t on the year to about 1.41mn t. Australia has been diversifying its thermal coal export destinations, and Vietnam appears to be a key, growing market for its supplies.

Indonesia was the next biggest supplier, accounting for 1.13mn t of January imports, although receipts fell by 147,010t from a year earlier as shipments were impacted by heavy rainfall that weighed on Indonesian port operations.

Vietnam imported 551,866t from Russia in January, up from 461,738t from a year earlier.

Vietnamese coal-fired generation capacity is on course to rise at its fastest rate in five years in 2020, with growth expected to be even greater in 2021 and 2022.

Vietnam commissioned 1.2GW of new coal-fired generation capacity in 2019 to bring the total to 19.2GW. It is scheduled to bring 2.1GW on line this year, with 3.7GW under construction for commissioning in 2021 and 3.2GW under construction for 2022. A further 870MW is planned to come on line in 2022, although construction has yet to begin.

Each additional 1GW of installed coal capacity could add 2.6mn t/yr of power-sector coal consumption, assuming a plant efficiency of 40pc, average load of 70pc and NAR 5,000 kcal/kg calorific value.

Vietnam will add 19GW over the next decade if all plants currently planned come on line as scheduled. Capacity has risen by just over 6GW in the past five years and by 16.7GW over the past decade.

By Saurabh Chaturvedi