‘High coal inventory to keep domestic production levels under check’

High coal inventory at power stations may continue to keep the domestic production and offtake levels under check in the near term, said India Ratings and Research (Ind-Ra). Accordingly, users may resort to domestic coal over imported ones given the elevated import prices, especially for non-coking coal, supporting offtake.

“The proposition to allow Coal India Limited (CIL) to export surplus coal may offer newer offloading opportunities, subject to India’s competitiveness in the international market,”. Notably, coal offtake improved 1.8 per cent month on month (mom) in January 2021 to 58.9MT, driven by a 4.4 per cent mom higher domestic power demand.

However, the offtake was lower 4.5 per cent year on year (yoy) due to the high inventory levels at power stations.
Nevertheless, domestic coal production continued to improve in January 2021 to 66.5MT, higher by 3.8 per cent on mom level but lower by 3.4 per cent on yoy basis.

“The output in 2HFY21 is likely to be supported by about 7 per cent yoy higher overburden removed in 1HFY21 from open cast mines due to a lower coal demand over 1HFY21.”