State-run miner Coal India Ltd (CIL) has recorded an uptick in coal supply to the non-power sector in May 2022 supported by a dip in power demand from the record-high levels seen in April.
Dispatches to the non-power sector grew 17% m-o-m to 9.1 million tonnes (mnt) in May compared to April 2022 when supplies fell to its lowest monthly volume since April 2020. However, dispatches were 20% lower y-o-y compared to 11.37 mnt in May 2021.
The company continued to bolster supplies to the power sector facing critical inventory levels. This was helped by stringent measures taken by the railways which include cancellation of passenger trains to facilitate coal movement.
Nevertheless, supplies to the non-power sector picked up amid lower power consumption. As per data provided by POSOCO, the consumption rate saw a marginal fall to 4.39 billion units (BU)/day in May against 4.43 BU/day in April.
Captive power producers suffer more
The prevailing supply tightness has adversely affected the entire chain of non-power sector at a time when prices in the global market are soaring. In fact, apart from steel plants, CIL’s coal supplies to remaining end-user industry fell on a y-o-y basis in May.
Coal dispatch to non-power sector
Source: Coal Ministry | Quantity in mnt
The impact was more pronounced in case of captive power plants whose supplies were curtailed to the tune of 40% on the year for the second-month running. As a result, the industries relying on domestic coal for captive power generation are compelled to purchase power from the exchanges at higher rates.
With the impending arrival of the monsoon, the coal ministry has warned the power sector regarding the expected disruption in coal supply during the rainy season and has directed them to raise supplies from captive mines and imports.
This implies that there would be no immediate relief for the non-power sector which is accorded preference next to the merchant power plants in terms of coal supplies.
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