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NEW DELHI : Coal offtake is likely to increase in the April-June quarter of FY23 compared to the same period of the last financial year, according to India Ratings & Research.
“Coal offtake is likely to be higher YoY in 1QFY23, especially from the power sector amid sustained high import prices, for pre-monsoon re-stocking at power plants up to the government mandated levels of 45 million tonnes (MT)," said statement by the ratings agency. As of end of March 2022, the closing stock was around 25 million tonne.
It added that the inventory build-up shall also be supported by a lower dependence on thermal power as the contribution of renewable sources of power having the must-run status is generally higher in the first two quarter of a fiscal.
It also said that India’s coal production is likely to be higher on a year-on-year (YoY) in 1QFY23 in line with pre-covid levels. During the first quarter last fiscal, coal production was 9.4% lower than that in 1QFY20.
“Ind-Ra believes India’s coal production and offtake to increase year on year (yoy) in 1QFY23, amid sustained high import prices and re-stocking requirements ahead of monsoons. Import prices of thermal coal and coking coal are unlikely to witness a sharp correction over 1QFY23, supported by global supply concerns post the sanctions on Russia, a sustained high demand, highly volatile alternate energy fuel prices and continued logistic challenges," it said.
It further said that from Indian perspective imported coal is likely to be accessible at a lower cost, considering the country is exploring coal imports from Russia amid sanctions on the latter by major western countries and the recently signed free trade agreement (FTA) with Australia.