中文
India is making progressive efforts to keep pace with soaring power demand which is putting a high level of pressure on the coal-fired utilities that account for around 70% of domestic energy generation.
The country recorded historic growth in its coal output at 892.21 million tonne (Mt) in FY23. Total production was 15% higher compared to 777 Mt in FY22. Despite this, India's coal imports increased sharply by around 18% y-o-y to over 237 Mt in FY23 from 202 Mt in FY22, CoalMint data shows.
Out of total import shipments, those of non-coking or thermal coal stood at over 166 Mt, which is roughly 70% of total imports. Non-coking coal imports edged up by 23% y-o-y on higher demand from power producers and with the government mandating imports to meet peak power demand.
Imports increased also due to shortfall arising from logistical bottlenecks and the prevailing policy of supply prioritisation for the power sector by state-owned miner CIL, which is forcing the non-power sector to go for imports.
Coal stock situation
Total coal inventory available at power plants and mines run by CIL is assessed at 100.45 Mt at the end of April, up 28% from year-ago levels.
This indicates vast improvement from the period when inventory had plunged resulting from higher coal consumption during summer and lower supplies in monsoon.
Nonetheless, given the significant bearing of the power sector on the supply chain and the continual disruption which has become a cyclic phenomenon, imports are unavoidable.
Unseasonal rains
Coal-based power generation grew marginally by 0.2% y-o-y to 105.9 billion units (BU) in April as against 105.64 BU in April 2022.
The can be attributed to the unseasonal rains in many parts of the country which reduced demand for electricity in the ongoing summer period. So coal consumption was not as strong as was predicted earlier.
However, generation volume rose by 6% m-o-m to 3.53 BU/day in April as against 3.33 BU/day in March, to compensate for the generation loss from alternate power sources, for instance the scant generation of hydropower during the summer months with a drought-like situation prevailing in different regions of India.
So, inventory levels at power stations dropped in April following a steady build-up recorded over the past six months. The m-o-m stock liquidation compared to March was 1.1 Mt as against 3.5 Mt in the year-ago period.
To ensure adequate power availability, the Ministry of Power (MoP) has instructed power plants to import 6% (by weight) of their coal needs for blending purposes till September this year. A similar mandate had been issued last year too. That time, the blending ratio was kept at 10%.
As per government mandate, NTPC, India's largest power producer, has decided to import around 5.4 Mt of coal during the first half of FY24 but no tender has been floated lately.
Dispatches to non-power sector
CIL stepped up supply regulation to ensure higher volumes for the power sector which resulted in reduced quantities being offered in e-auctions. Notably, total sales via auctions dropped to the lowest level in the past seven fiscals in FY23.
However, gradual build-up of inventory at mines and subdued coal-fired power generation indicate there is increasing likelihood that CIL will allocate more volumes for sale via auctions this year.
Early signs have been encouraging in terms of supply improvement for the non-power sector. CIL's dispatches to the end-user industry registered 44% growth to 11.8 Mt during April, which is the highest ever recorded in April so far.
A grade-wise break-up of auction sales shows that allocation in the high-CV basket increased in spite of overall volumes falling last year. With CIL subsidiaries planning to further scale up production, there are chances of enhanced availability of quality material particularly from Eastern Coalfields (ECL) and North Eastern Coalfields (NECL).
Another important reason why auction sales may increase in the near-term is correction in domestic coal prices on global market cues.
Outlook
In view of the stable stock scenario and firm measures already in place to bolster domestic supplies, it is unlikely that imports by the utilities will rise in the coming quarter unlike last year.
However, there are forecasts of heatwaves in many parts of the country and pre-monsoon restocking activity will sustain interest in imports.
The government is also working on a 'monsoon management plan' to ensure adequate availability of fuel at power plants during the rainy season when both coal production and evacuation are impacted. So, if any abrupt rise in power demand is tackled successfully it will lead to better distribution of coal across sectors.
Global price dynamics also affect imports. For example, a cement major has reduced thermal coal imports this year in favour of pet coke of US origin due to global price correction of the latter commodity. Moreover, global commodities demand impact the performance and raw material sourcing of industrial users such as aluminium producers.
In order to augment domestic coal availability, the government has set a target to produce 1,012 Mt of coal in FY24. The production target for CIL has been fixed at 780 Mt, Singareni Collieries (SCCL) at 70 Mt, while the remaining output of 162 Mt is expected to come from a mixed bag of captive and commercial miners.
This article has been published under the exchange agreement between Sxcoal and CoalMint.
(Writing by Emma Yang Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.
