Thermal Coal Import Likely To Cross 200 Million Tonnes In 2019-20
A front loader loads coal onto a freight wagon in Chandwa, Jharkhand, India. (Photographer: Prashanth Vishwanathan/Bloomberg)  

Thermal Coal Import Likely To Cross 200 Million Tonnes In 2019-20

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India’s overall thermal coal import is likely to cross the 200-million tonne mark in the current financial year, according to ICRA.

“Thermal coal imports expected to cross 200 MT in fiscal year 2020,” ICRA said in a statement on Monday.

Coal India Ltd.’s production might fall short of its 2019-20 target of 660 MT by around 55-75 MT, ICRA said.

Coal India registered a year-on-year decline of 23.5 percent in production in September, as operations were impacted by labour issues and flooding of key mines due to heavy rains.

In the first half of the current financial year, Coal India’s production witnessed a fall of 6 percent year-on-year, in stark contrast to the healthy production growth of 7 percent achieved in 2018-19.

“Thus, in order to achieve the targeted annual coal production or come anywhere close to the annual guidance of 660 MT and, given the first half slippages, CIL would have to step up to an average run rate of 2.3 MT coal production per day for the rest of the year,” it said.

This looks an unlikely task, given that in recent times, the central miner has been able to briefly sustain at the two million tonnes per day average coal production rate only in the months of March 2018 and March 2019, it said.

Consequently, fully recovering the lost ground during the second half would be challenging, it added.

As Coal India Ltd. attempts to make up for the lost volumes in the second half, the power sector is expected to be a much larger beneficiary of the incremental supplies, given that it gets higher priority over supplies to the non-regulated sector, it said.

Consequently, imports by the non-regulated sector are expected to remain elevated for the year as well.

“Given CIL's lacklustre first half performance, coal stocks at domestic thermal power plants have steadily depleted from 33 million tonne at the end of May 2019 to around 22 million tonne at the end of Sept. 2019,” Jayanta Roy, senior vice-president and group head (corporate sector ratings), ICRA, said.

Since power plants in the northern region contributed around 50 percent of this inventory run-down, they would be more vulnerable if the ongoing production shortage persists, Roy said

“Mirroring the lower coal despatches, generation from coal-based thermal power plants fell by 4.0 percent year-on-year in August 2019, and by a steeper 10.6 percent year-on-year in September 2019,” Roy added.

Also read: Coal India Output Sinks to Record Low as Monsoons Flood Mines

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