India’s largest coal miner, Coal India Ltd (CIL), maintained its higher production levels in Jan’22 to an extent that it outstripped the dispatch volume for the first time in the ongoing fiscal FY’22 (Apr’21-Mar’22).
Coal production increased 7% m-o-m to 64.49 million tonnes (mnt) in Jan’22 compared to 60.2 mnt in Dec’21. On the other hand, dispatches were recorded at 60.8 mnt, registering a marginal m-o-m rise against 60.6 mnt in Dec’21.
Mahanadi Coalfields Ltd (MCL), with an output of 17.34 mnt, remained the largest coal producing subsidiary in Jan’22. Remarkably, all the subsidiaries had maintained higher production compared to the dispatches during the month.
Subsidiary-wise performance in Jan’22
Quantity in mnt
Driven by substantial growth in power demand post-easing of lockdown restrictions, the company has witnessed strong demand for coal from the thermal power plants. However, production volumes have increased at a slower pace compared to demand.
Incidentally, the company’s monthly dispatches were more than the corresponding production in each of the first nine months of FY’22 (Apr-Dec’21), requiring it to liquidate the surplus inventory available at its pithead mines.
Generally, production level is gradually increased towards the second half of every fiscal, thereby replenishing the stock level. But, due to elevated demand from the power sector, it was relying on inventories.
In fact, after a steady decline for the 9 straight months up to Dec’21, inventory level saw an uptick to 35.93 mnt at the end of Jan’22, in tandem with the increased production. Nonetheless, it still remained 47% lower than the year-ago levels.
Restocking demand to push dispatches
During the first 10 months (Apr’21-Jan’22), CIL’s coal dispatches reached 542.44 mn t, up 13% compared to the production recorded in the same period of the previous fiscal, at 478.12 mnt.
The company had dispatched coal at an average of 1.94 mnt/day during Jan’21. Maintaining this rate for the remainder of the fiscal would help it to achieve its highest-ever dispatch volumes.
Increased supply would be supported by restocking demand of the power plants whose coal inventories are currently assessed below normative levels. However, a considerable growth in production is also required in order to maintain an adequate buffer stock at the coal mines before going into the peak summer season.
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