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High Inventories may continue to keep coal domestic production, offtake levels under check: Ind-Ra
Mar-05-2021

Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report on ‘India’s coal sector’ has said that while the high inventory at power stations and mines may continue to keep the domestic production and offtake levels under check in the near term, the players may resort to domestic coal over imported coal given the elevated import prices, especially for non-coking coal, supporting offtake.

As per the report, coal offtake improved 1.8% month on month (mom) in January 2021 to 58.9MT, driven by a 4.4% mom higher domestic power demand. However, the offtake was lower 4.5% year on year (yoy) due to the high inventory levels at power stations. Domestic coal production continued to improve in January 2021 to 66.5MT, higher 3.8% mom but lower 3.4% yoy. The output in 2HFY21 is likely to be supported by about 7% yoy higher overburden removed in 1HFY21 from open cast mines (around 94% of total production) due to a lower coal demand over 1HFY21.

Besides, the rating agency said that with the formalised ban imposed by China on Australian coal imports, coking coal import prices remained subdued over November-December 2020, on the back of an oversupply in the global market. Since mid-January 2021, coking coal import prices spiked to 49% ahead of the Chinese New Year holidays in February 2021, losing momentum thereafter with a dip of 11% in prices up to end-February 2021.

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