As coal mining PSUs gear up to meet the country’s electricity demand from coal-fired power plants ahead of the peak summer season, non-power sector (NPS) industries have again sounded alarm bells over the constant reduction in their supplies from 3.6 lakh tonnes per day (LTPD) to 2.75 LTPD, against a daily average requirement of 5 lakh tonnes.

This comes at a time when the power and NPS sector have cut down on imports due to surging international prices. Besides, industry players said online auctions by the State-run Coal India (CIL) in recent months have witnessed record premiums of more than 100 per cent, thereby escalating cost of the crucial commodity.

Industry appeals to PMO

Last week, the industry body, Aluminium Association of India (AAI), in a letter to PK Mishra, Principal Secretary to the Prime Minister, had said the coal supply crisis has adversely impacted NPS industries, particularly the captive power plants (CPPs) of the highly power intensive aluminium industry, which continues to struggle for un-interrupted coal supplies and is facing depleted stocks of 3-4 days against the prescribed level of over 15 days.

“This has further aggravated with the recent directions of CIL and its subsidiaries (on March 17) to curtail coal supplies for NPS not only through rail mode but also via road. This new adhoc decision without any advance notice has brought the industry to a standstill and left with no time to devise any mitigation plan to continue sustainable operations,” AAI said.

E-auctions witness high premiums

ICICI Securities said volumes for April-December of FY22 were at 86 mt (up 3 per cent y-o-y). CIL is offering more volumes to the non-regulated sector (NRS) and targeting auction of more than 110 mt for FY22. E-auction lifting in Q4 FY21 was 29 mt and CIL expects higher volumes in Q4FY22.

“January premiums were 103 per cent and we expect the same to be higher as international coal prices have soared to unsustainable levels for importers who are seeking higher domestic sourcing. Further, there is an impending concern of new curbs on export of Indonesian coal which, if levied, will result in a disruption similar to that in January and will fuel the already fired up coal prices further, resulting in further domestic coal demand,” the brokerage added.

Declining imports

Record prices of coal in international markets has impacted in-bound shipments for both power and non-power sectors.

Overall coal imports have been consistently heading south since FY20. From the peak of 248.54 mt in FY20, imports fell to 215.25 mt in FY21. During April-January period in FY22, it fell further to 173.32 mt.

In-bound shipments also fell from 69.22 mt in FY20 to 45.47 mt in FY21. Further, during April 2021-January 2022 period in FY22, in-bound shipments shrunk to 22.73 mt against 39.01 mt a year-ago.

High international prices

Global coal prices were already at high levels, and the ongoing Ukraine crisis has pushed them to unprecedented highs. The ongoing disruption in global coal supplies has resulted in skyrocketing prices, ICICI securities said in a recent report.

Current prices for Australian coal (6,000 kcal/kg), South African (6,000 kcal/kg) and Indonesian coal (5,900 kcal/kg) were at $170, $353 and $443 a tonne, respectively. Newcastle coal futures in Europe crossed $440 per tonne in March. This is expected to result in higher e-auction premiums for CIL, the brokerage added.

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