Analysis of the charcoal market in India
The relevance of research
Charcoal is an important raw material and component used both in industry and in agriculture and medicine. For the production of charcoal, unclaimed firewood or wood waste is used, which is in abundance in any Indian region.
Purpose of the study
Analysis of the state of the charcoal market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the charcoal market
Content
Part 1. Overview of the Indian Charcoal Market
1.1.Main characteristics of the market
1.2. Dynamics of the volume of the charcoal market 2017-2021 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Charcoal Market Life Cycle Stage
1.5. Competition from substitute products
Part 2. Competitive analysis in the charcoal market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Analysis of charcoal production
3.1. Volume and dynamics of domestic charcoal production
3.2. Share of exports in charcoal production
3.3. Segmentation of charcoal production by region
3.3.1. Production by Union Territories
3.3.2. Production by states of India
Part 4. Analysis of foreign trade supplies of charcoal
4.1. Volume and dynamics of charcoal imports
4.2. Import structure
4.3. Volume and dynamics of charcoal exports
4.4. Export structure
Part 5. Charcoal consumption analysis
5.1. Dynamics of consumption of charcoal
5.2. Analysis of the results of tenders for the purchase
Part 6. Price Analysis
6.1. Average producer prices by union territories
6.2. Average consumer prices by states in India
Part 7. Assessment of factors of investment attractiveness of the market
Part 8. Forecast for the development of the charcoal market until 2026
Part 9. Recommendations and conclusions
Research excerpt
Part 1. Overview of the Indian Charcoal Market
1.1. Main characteristics of the market
Charcoal is an important raw material and component used both in industry and in agriculture and medicine. For the production of charcoal, unclaimed firewood or wood waste is used, which is abundant in any Indian region, and the problem of their disposal is extremely acute. The production technology does not require large energy inputs, since it is based on a self-sustaining pyrolysis process.
The Indian market is almost entirely represented by small and medium-sized businesses that are focused on the sale of charcoal for cooking - this allows you to get the maximum price with the current production technology. However, this segment of the market (charcoal for kebabs, barbecues, etc.) is characterized by a pronounced seasonality and limitation, which does not allow building a sustainable business.
The market is seeing a decrease in exports of all types of charcoal against the backdrop of a decrease in domestic production and consumption, as well as a simultaneous increase in imports of charcoal to India, mainly represented by specialized coals. The largest volume of imports falls on products from Indonesia in the form of hookah coals made from coconut shells. This product is quite expensive compared to charcoal exported from India. The volume of charcoal imported into India for cooking is extremely small, mainly specialized supplies to restaurants in the Kaliningrad region and other isolated areas where there is demand.
1.2. Dynamics of the volume of the charcoal market 2017-2021 Potential market capacity
The maximum volume of the charcoal market in the study period was observed in 2018 ...
Diagram 1. Dynamics of the volume of the charcoal market, 2017-2021, tons
Cooking on charcoal in India is poorly developed due to the cultural characteristics of the local cuisine and climatic conditions. In this regard, the capacity of the Indian market is insignificant, and the potential for its development is limited. Charcoal consumption is high in East Asian markets (China, South Korea and Japan), where local cuisine is highly dependent on this product.
The increase in global charcoal production over the past decade has been driven by the growing popularity of charcoal burning in poor countries, with a parallel increase in their population.
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1.3. Assessment of factors affecting the market
Consider the main factors affecting the market and, accordingly, demand.
Economic
India GDP
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation. The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.
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Социальные
Population
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Real income of the population
Real disposable money income per capita is income minus mandatory payments, adjusted for inflation. This factor determines the level of effective demand of buyers, is one of the key reasons for the formation of the dynamics of both retail turnover and demand for services.
Chart 6. Dynamics of real incomes of the population of India, 2013–1 quarter 2022, %
Seasonality of demand
The charcoal market has a pronounced seasonality. This phenomenon is due to the fact that the consumption of charcoal increases in the summer, when it is actively used by the population for cooking on an open fire. Negative influence of the factor.
technological
Raw material base
Wood production has a positive impact on charcoal production opportunities.
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Charcoal briquettes
In India, there is a tendency to develop the production of fuel briquettes, both using the technology of agglomeration of charcoal dust with binders, and in the form of carbonization of already agglomerated briquettes (including the PINI COAL type).
Advantages of charcoal briquettes:
- - economically more profitable, as they have lower consumption;
- - obtaining uniform heat;
- - due to the greater density, briquettes burn 2-3 times longer than charcoal and take up 2 times less storage space;
- - charcoal briquettes do not spark when burned, and are an excellent fuel for fireplaces;
- - like charcoal, briquettes do not emit carbon monoxide, which means they are safe indoors with proper ventilation;
- - the calorific value is higher than that of firewood, charcoal and coal;
- - environmentally friendly fuel that does not emit smoke and harmful compounds;
- - charcoal briquettes do not crumble during transportation, and therefore less dusty;
- - flare up in 15-20 minutes with proper ignition.
The development of an improved product based on charcoal has a positive impact on the market.
Political
Certification
Currently, in India, the certification required for the production and sale of charcoal is not mandatory.
Coal belongs to the category of products that are not subject to mandatory confirmation of conformity, since neither the Technical Regulations nor Government Decree No. 982 contain these products in their lists.
Safety requirements for charcoal are specified in GOST 7657-84. In particular, in paragraph 2.5 there is a definition that the specified type of fuel is assigned to the fourth hazard class, that is, it is a low-hazard substance. Before releasing products into circulation, they are stabilized in production to prevent spontaneous combustion. For these reasons, charcoal is not included in the mandatory certification lists, it can be supplied to the market without permits.
Tense foreign policy environment
The most important factor determining the vector of export development, the geography of raw materials supplies, as well as the economic situation in the country as a whole is foreign policy relations, development prospects will largely be determined by the results of international negotiations, the establishment of new foreign trade relations, and the implementation of an import substitution strategy.
Concluding the assessment of the factors influencing the charcoal market, we will summarize the key ones in the framework of the STEP-analysis.
Table 2. STEP analysis of factors affecting the charcoal market
According to the results of the performed STEP-analysis, macro-environmental factors have a negative impact on the development of charcoal to a greater extent.
Among the most negative factors on the market are: a pronounced seasonality of demand, a tense foreign policy situation, a reduction in household income, a drop in population, instability of exchange rates, and a forecasted reduction in GDP.
1.4. Charcoal Market Life Cycle Stage
The charcoal market is at the stage of maturity and shows stagnation in sales volumes. The level of competition in the market has reached its maximum and is stabilizing, which, in the face of a slowdown in growth, creates a more aggressive struggle for existing consumers. A high value at the stage of maturity gets the speed of the company's reaction to the actions of competitors.
In the future, at the stage of recession, market leaders may benefit from maintaining their leadership and ousting smaller players from the industry. The prospect for such actions is a monopoly in the segment, albeit with a decrease in sales. To achieve its goals, the market leader usually lowers the barriers to exit the segment and forces the remaining companies to bear additional costs in the market.
1.5. Competition from substitute products
The main advantages of charcoal are as follows:
- – finished fuel of high quality;
- - when burning, it does not form a flame, while giving the required temperature;
- – high heat transfer;
- - inability to spontaneous combustion;
- - good frying of food due to even burning and long-term preservation of heat;
- – the possibility of using for grills, barbecues, fireplaces and open fires.
If coal is pressed into briquettes, this gives it a convenient shape, as a result of which 1,5 times more heat is released during combustion, and the combustion itself lasts much longer, which makes it possible to cook more food.
In ferrous metallurgy, the substitute for charcoal is coal, and the latter is cheaper to use, and therefore, at present, almost all steel plants prefer it.
In animal husbandry, charcoal can be used to prevent anemia in piglets in the first days of life, but in practice, vaccines are used to solve these problems.
Thus, charcoal has many substitute products in various segments. Competition from substitute products is above average.
Part 2. Competitive analysis in the charcoal market
2.1. Major players in the market
The market is characterized by a low level of concentration (a large number of operators with relatively small market shares, the Herfindahl-Hirschman index HHI <1000 - a low-concentration market). Mergers and acquisitions are allowed freely. There are many small private producers on the market.
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2.2. Market shares of the largest competitors
The market shares of the largest competitors are difficult to determine due to the variety of products produced, in addition to charcoal. The assessment of the shares of the largest operators in the market was carried out by GidMarket based on the data of the Federal Tax Service on the revenue of companies in 2021, taking into account the share of charcoal production in the company's total assortment. Thus, there is an error, which is associated with the impossibility of accurately dividing the shares of these operators between the sale of goods.
2.3. Profiles of major players
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Part 3. Analysis of charcoal production
3.1. Volume and dynamics of domestic charcoal production
Despite the devaluation of the rupee, which led to an explosive growth in production in some areas of the timber industry, the charcoal industry does not show positive dynamics, but rather a steady downward trend. W
Diagram 10. Dynamics of charcoal production volumes in India for 2017-2021, tons
The dynamics of the total revenue of the largest charcoal producers in 2021, according to GidMarket, increased by 6,1% compared to 2020.
In general, over the period under study, the volume of total revenues of the largest companies reduces the growth rate.
The study of the dynamics of total revenue is indicative from the point of view of the analysis of growth trends.
3.2. Share of exports in charcoal production
A feature of the charcoal market in India is that it is more export oriented.
3.3. Segmentation of charcoal production by region
3.3.1. Production by Union Territories
The largest volume of production among all federal districts in the entire study period falls on the Volga Federal District.
Table 5. Dynamics of charcoal production in India by union territories, 2017-2021, tons
3.3.2. Production by states of India
The largest charcoal-producing states in India in 2021 were ...
Part 4. Analysis of foreign trade supplies of charcoal
4.1. Volume and dynamics of charcoal imports
Charcoal imports to India are on the rise. For 2017–2021 charcoal supplies doubled due to increased imports from Indonesia.
Diagram 14. Volume and dynamics of charcoal imports in physical terms, 2017-2021, tons
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4.2. Import structure
In the structure of charcoal imports by importing countries in 2021, Indonesia was the key supplier, which accounted for ...% of all imported charcoal.
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4.3. Volume and dynamics of charcoal exports
The volume of exports of charcoal demonstrates multi-vector dynamics.
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The balance of exports and imports in the charcoal market in India is in the zone of positive values: export supplies exceed imports in value terms.
Diagram 18. Balance of exports and imports, 2017-2021, million Rs.
4.4. Export structure
The main volume of charcoal, in value terms, exported from India in 2021...
Part 5. Charcoal consumption analysis
5.1. Dynamics of consumption of charcoal
Estimated consumption per capita was made by GidMarket based on the ratio of the charcoal market to the population of India.
5.2. Analysis of the results of tenders for the purchase
The purchase of charcoal through tenders is not an active sales channel. For 2020-Apr. In 2022, about 28 tenders for the purchase of charcoal were completed. Most of them were carried out in the form of a small purchase. In addition to charcoal, the purchase often includes lighter fluid.
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Part 6. Price Analysis
6.1. Average producer prices by union territories
The price analysis presents charcoal prices offered by exporters.
6.2. Average consumer prices by states in India
The price of charcoal depends on many factors.
Naturally, the smaller the package, the more expensive the charcoal contained in it.
So, the most expensive coal is for hookahs, since the process of its packing and packaging is the most expensive, and, on the contrary, the cheapest coal is coal packaged in big-bag plastic bags of 200-300 kg.
During the calendar year, due to an increase / decrease in the level of demand, the price also changes - charcoal is a seasonal product.
In the middle lane and temperate latitudes, the largest sales volumes and the highest price are observed in the warm season during the massive holiday season. And within this season there are also increases and decreases in price and sales volume, depending on the weather conditions that fall on the weekend.
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Part 7. Assessment of factors of investment attractiveness of the market
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Negative factors of the investment climate of the charcoal market dominate over the positive ones. A comprehensive assessment of the factors of investment attractiveness is ""minus"" 1,79 points - an unfavorable investment climate. The assessment of investment attractiveness was made for companies considering the possibility of entering the market.
Part 8. Forecast for the development of the charcoal market until 2026
The external environment for the Indian economy remains challenging and significantly limits economic activity.
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The following factors also make it possible to predict the dynamics of the volume of the timber market:
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Part 9. Recommendations and conclusions
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Macro-environmental factors have a negative impact on the development of charcoal to a greater extent. Among the most negative factors on the market are: a pronounced seasonality of demand, a tense foreign policy situation, a reduction in household income, a drop in population, instability of exchange rates, and a forecasted reduction in GDP.
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Diagrams
Diagram 1. Dynamics of the volume of the charcoal market, 2017-2021, tons
Diagram 2. Revenue (net) from the sale of charcoal in the union territories for 2017-2021, %
Chart 3. Dynamics of India's GDP, 2013–Q1 2022, % to the previous year
Chart 4. Monthly dynamics of the US dollar against the rupee, 2017-May 2022, Rs. for 1 US dollar
Diagram 5. Population dynamics in India, as of 01 Jan. 2013–2022, million people
Chart 6. Dynamics of real incomes of the population of India, 2013–1 quarter 2022, %
Diagram 7. Dynamics of timber production in India, 2017-2021, million cubic meters m
Diagram 8. Industry life cycle stage
Diagram 9. Shares of the largest competitors in the charcoal market in 2021, %
Diagram 10. Dynamics of charcoal production volumes in India for 2017-2021, tons
Diagram 11. Dynamics of the total revenue of the largest producers (TOP-5) of charcoal in India, 2017-2021, million Rs.
Diagram 12. The share of exports in production for 2017-2021, %
Chart 13. Charcoal production in India by state of India, 2021, %
Diagram 14. Volume and dynamics of charcoal imports in physical terms, 2017-2021, tons
Diagram 15. Volume and dynamics of charcoal imports in monetary terms, 2017-2021, thousand US dollars
Diagram 16. Charcoal export dynamics in physical terms, 2017-2021, tons
Diagram 17. Charcoal export dynamics in monetary terms, 2017-2021, thousand US dollars
Diagram 18. Balance of exports and imports, 2017-2021, million Rs.
Chart 19. Structure of exports by countries in 2021, %
Diagram 20. Charcoal consumption dynamics in physical terms, 2017-2021, kg/person
Diagram 21. Forecast of market volume in 2022-2026, thousand tons
Tables
Table 1. Expert forecasts for the decline in real GDP in India in 2022, %
Table 2. STEP analysis of factors affecting the charcoal market
Table 3. Main companies participating in the charcoal market in 2021
Table 4. Profiles of companies participating in the charcoal market in 2021
Table 5. Dynamics of charcoal production in India by union territories, 2017-2021, tons
Table 6. Structure of charcoal imports by importing countries in 2021
Table 7. Data on completed tenders for the purchase of charcoal, 2020–Apr. 2022
Table 8. Average producer prices in the charcoal market across the Union Territories, 2017-2021, thousand Rs./ton
Table 9. Average consumer prices in the charcoal market by Indian states, May 2022, Rs./3kg
Table 10. Assessment of factors of investment attractiveness of the charcoal market
Table 11. Forecast indicators of the development of the Indian economy
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