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Coal India Reverses Output Drop as Power Plant Stockpiles Plunge

Coal India reports first increase in monthly production on a year-on-year basis in five months.

Coal India Reverses Output Drop as Power Plant Stockpiles Plunge
A worker loads coal into a sack at a wholesale supplier’s (Photographer: Prashanth Vishwanathan/Bloomberg)

(Bloomberg) -- Coal India Ltd., the world’s biggest producer of the fuel, reported the first increase in monthly production on a year-on-year basis in five months after power plant inventories plunged and the miner’s own stockpiles declined.

Output in August rose 16 percent from a year ago to 37.63 million tons, according to Bloomberg calculations based on a stock exchange filing by the company on Friday. Shipments rose 19 percent to 43.75 million tons, advancing for 10 straight months.

Inventories at power plants, the biggest users of coal in the country, dropped to the lowest since December 2014 as of Aug. 28, with several plants running at less than seven days of stockpiles, a critical benchmark. Coal India, which had trimmed output over the past few months to reduce its own stockpiles, is now seeking to replenish the falling inventories at power plants. Its own stocks have fallen below a targeted 40 million tons, a company official told Bloomberg News earlier this week.

“Going forward, we’ll see the gap between shipments and production reducing,” said Rupesh Sankhe, an analyst at Reliance Securities Ltd. in Mumbai. “Coal India will continue to maintain the current level of inventories, and for that production has to rise now.”

Coal India reported a 10.5 percent decline from a year ago in output August last year, while its shipments dropped 9.6 percent during the same month.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net.

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Abhay Singh, Tuhin Kar