India: CIL’s coal production matches dispatches in Oct’22

India’s largest coal miner, Coal India Ltd (CIL), has scaled up its production to an extent that it reached almost the levels of dispatches in October, 2022, thereby reducing the gap between these two parameters.

Both production and dispatches picked up pace m-o-m post-monsoon, but a contrasting patterns was seen on a y-o-y basis. Production rose 6% y-o-y to 52.94 million tonne (mnt), while dispatches were down 5% y-o-y to 53.68 mnt in October, 2022.

This was the first time that dispatches had fallen y-o-y in FY23. Nevertheless, it was more than the corresponding production–a trend that continued in October thus extending its run since April, 2022.

The company tends to augment dispatches by lowering the production levels during the first half of the fiscal to liquidate the surplus inventory accumulated at mines. Importantly, the need of higher dispatches was more pronounced this year to address the low inventory position at the power plants amid strong demand.

Inventory falls to a new low

Notwithstanding the rise in production, coal inventory at CIL’s mines hit a new low of 27.09 mnt at the end of October, 2022 as against 35.4 mnt assessed in the year-ago period. Currently, the inventory is recorded below the 30-mnt mark which was last seen in December, 2019.

However, it is expected that the miner would be in a better position in the coming month supported by the continual uptick in production especially when the impact of monsoon has subsided in India.

At the same time, lesser burden is anticipated on the demand side as power consumption has gradually eased off due to favourable weather conditions.

Tentative data provided by POSOCO indicates that average power consumption decreased 13% m-o-m to 3.71 billion unit/day (BU/day) in October, 2022 while registering a modest growth of 1% y-o-y against 3.69 BU/day in October, 2021.

Further suppressing coal requirement, the power plants are presently sitting on a comfortable inventory level of 28.22 mnt in end-October, 2022. This marks significant progress compared to the year-ago period when inventory had dropped to 14.02 mnt.