Indian domestic coal market has again come into scrutiny, with coal stocks waning at the thermal power stations.
According to the data provided by CEA, Coal stock available at the power plants (having coal linkages) had fallen 8% M-o-M to 15.11 MnT as on 21 May’18, compared with 16.507 MnT on 21 Apr’18.
The rise in power demand for summer season has depleted coal stocks at the power plants which were having coal sufficient for 10 days of power generation. Besides, 22 plants were said to have a stock level of less than 7 days available to them.
In order to revive the condition at the thermal power plants, the coal ministry is again appearing to favour the power producers for the coal supply.
Recently, Market reports have claimed that Vedanta Ltd had raised concerns regarding a decline in coal supply to its Aluminium smelter at Odisha. The company had informed that Mahanadi Coalfields Ltd (MCL), one of the subsidiaries of CIL operating in Odisha, had halted coal supply to non-power customers following a government directive to prioritise the power sector.
MCL has not come up with an official circular regarding the coal supply cut, unlike the previous year when the company had given prior intimation to its non-power customers of a 20% cut in monthly coal allocation during Sep’17-Dec’17, in order to augment coal supplies to the power sector.
However, the company has halved the coal quantity offered in the monthly spot e-auctions to 0.5 MnT in May’18, which is scheduled to be held on 31 May’18.
Consequence of Domestic Supply Cut:
Following the domestic coal supply cut in FY18, India had witnessed a spurt in demand for coal imports. The non-power sector had recorded higher coal buying from South Africa to meet their demand.
According to the data provided by South African customs, coal exports to India had increased 24% Y-o-Y to 14.07 MnT during Sep’17-Dec’17, compared with 11.38 MnT during the corresponding period of last year.
The supply cut in the current year is likely to evoke similar response from the coal buyers, whose restocking demand for the monsoon season have also remained firm.
However, the soaring offers for South African coal has kept outlook unclear for Indian buyers, who would be eagerly waiting to see how the domestic coal production and dispatch are scheduled in the coming months.
South African 5500 NAR coal offers had remained firm, but had slightly came down from the previous week, assessed at USD 88-89/MT, FoB Richards Bay. 4800 NAR coal was offered at USD 71-72/MT, FoB Richards Bay.
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