India: Coal rake movement falls to 1-year low in September

Coal-laden rakes delivered by Indian Railways in September 2022 stood at 13,763 which is at a 12-month low, as per CoalMint data. Meanwhile, domestic coal rake movement fell to 10,883 in September from 11,624 in August, a drop of 6% while imported rake movement fell by 9% in the said period, to 2,881.

However, it is to be noted that coal rake movement in the said period was up 14.5% y-o-y. Indian Railways dispatched about 53.7 million tonnes (mnt) of coal in September by means of 13,763 rakes. Notably, each rake carries approximately 3,900 tonnes of coal.

Reason for fall in rake movement

Domestic coal rake movement started to fall with the advent of the monsoon as dispatches and production went down during this period. Notwithstanding  this decline, movement of imported coal rakes were rising as the Indian government had encouraged power plants to use more of imported coal for blending amid domestic shortage.

In a directive issued in April this year, the power ministry asked utilities to import 10% of their coal requirements for blending purposes. However, imported coal rake movement fell in September because coal inventory at power plants had improved to an adequate level. In addition, government had withdrawn the import mandate for these plants.

At the same time, Indian Railways had also withdrawn priority loading of coals which it had accorded in order to aid the power plants facing critical stock levels.

Zone-wise rake movement

• Except for South Central Railway (SCR), all the major zones have seen a decline in total coal traffic in September against August. SCR had seen an increase of 16% in domestic coal rake movement in the month under review.
• East Coast, East Central Railway and South East Central Railway handled 64% of total coal rake movement in India in September 2022.
• East Central Railway, South East Central Railway, and East Coast handled 66% of the domestic coal traffic in September. Meanwhile, they all observed a decline in coal traffic from August.
• East Coast Railway zone handled more than 50% of the imported coal traffic in the said period.
• Western Railway’s imported coal rake movement plunged by 34% m-o-m.

Outlook

In the near term, it is expected that coal rake movement will increase with the growth in coal production due to the end of the monsoon. In addition, coal demand will also rise with the onset of the festive season.