Thermal power plants drew down coal inventories in December 2025 to meet record electricity demand, according to daily coal stock data from the Central Electricity Authority (CEA). Total coal stocks across monitored plants declined by around 1% during the month, while stock adequacy relative to normative requirements fell by roughly five percentage points. This indicates that coal consumption marginally outpaced replenishment during the peak demand period.
The increase in the number of critically stocked plants highlights the strain within the logistics system, particularly for inland generators dependent on rail transport. While the overall decline in stocks was modest, the erosion of stock adequacy reduced the operational buffer that typically cushions the power system during periods of elevated demand.
The drawdown was driven by a sharp rise in coal consumption as thermal power plants ramped up output. Total electricity generation increased by 13.8% month-on-month in December 2025, with coal-based generation rising even faster at 15.8%. This reaffirmed coal’s role as the primary source of both baseload and peak supply, especially during evening hours when renewable generation tapers off.
At the same time, replenishment lagged demand. Rail logistics remained the binding constraint, limiting the ability of generators to rebuild stocks despite strong coal availability at the mine end. As a result, several plants operated with thinning inventories through the latter part of the month.
Stock adequacy declines
CEA data shows that over 99.6% of the monitored coal-based capacity remained operational throughout December, underscoring the sector’s resilience and centrality to grid stability. However, the decline in stock adequacy signals a reduction in operational flexibility. With fewer days of coal on hand, plants have less room to absorb supply disruptions, transport delays, or sudden demand spikes.
Shrinking on-site stocks also influenced market behavior. Some generators became more conservative in offering power on short-term exchanges, contributing to higher volatility in spot electricity prices during peak periods.
Outlook
In the near term, coal prices and procurement behavior are expected to be shaped by priority allocation to the power sector and the pace of rail-based replenishment. The drawdown in stocks has already shifted focus from opportunistic procurement to security-driven restocking, particularly at plants operating below comfortable inventory thresholds.
Coal producers and policymakers are likely to prioritize assured coal allocation and rake availability for power generators to rebuild stocks toward safer levels, typically above 85% of normative requirements. This emphasis on allocation discipline and logistics execution will act as a stabilizing force on domestic coal prices, limiting downside risk even as demand normalizes after the December peak.
At the same time, the reduced stock buffer means that any delays in rail movement or uneven rake distribution could quickly translate into procurement urgency. This is likely to keep spot coal prices firm, as industry seeks to secure volumes rather than optimize costs. Price volatility may persist in the short term, reflecting logistical constraints rather than fuel scarcity.
Looking ahead to the next major demand phase, including the summer of 2026, the system’s resilience will depend on sustained, above-average coal dispatches and efficient rail coordination. If stock rebuilding proceeds smoothly, price pressures should moderate. If not, coal prices are likely to remain supported by precautionary buying and allocation-led prioritization for the power sector.
December 2025 demonstrated the coal-based power fleet’s ability to meet record demand, but at the expense of fuel inventories. There is no immediate supply crisis, but the reduction in stock adequacy has narrowed the margin for error. In the months ahead, the sector’s performance-and coal price behavior-will be dictated less by production availability and more by how effectively coal allocation and rail logistics are aligned with the power system’s needs.
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