Coal imports surge, exceeding FY23 shipments amidst rising power demand

India’s thermal coal imports during the first 11 months of the current financial year, ending in March, have surpassed the shipments of FY23. Thermal power plants (TPPs) have increased their reliance on this dry fuel to meet the growing power consumption, anticipating peak demand to reach 255 gigawatts (GW) during April-June 2024.

According to data from the energy intelligence firm Kpler, India’s coal imports during February 2024 increased by 4 per cent m-o-m and 33 per cent y-o-y to 14.10 million tonnes (mt). The overall imports for April-February in FY24 reached 163.40 mt, reflecting a y-o-y growth of 11 per cent over the same period in FY23.

• Also read: Coal production soars past 900 mt; surpasses FY23 output

Shipments of the critical commodity, which accounts for more than 70 per cent of India’s power generation, have already surpassed the cargoes contracted during the entire FY23 (160.42 mt) in the first 11 months of FY24, Kpler data showed.

Government and analysts expect power demand to grow at 6-7 per cent y-o-y due to increasing consumption from industries and households. The peak power demand in FY23 reached 243 GW in September 2023 and projections suggest that it will reach 255 GW this summer.

Higher imports

A senior government official said that imports will be higher in FY24 as electricity consumption is increasing. This is coupled with the Power Ministry’s advisory on March 4 to TPPs to continue importing the fuel for blending at 6 per cent till June 2024

“Coal production has been impressive as India is on track to hit 1 billion tonnes this fiscal, but demand is also growing rapidly. Over the last two years, heat and humidity have led to increased demand for cooling, which is reflected in peak demand,” he explained.

• Also read: Power Ministry directs plants to continue importing coal for blending till June 2024

Kpler’s Lead Major Dry Bulks Analyst, Alexis Ellender told businessline, “Indian thermal coal imports rose sharply y-o-y in February, climbing by 3.49 mt to 14.10 mt, as shipments surged higher as the month progressed, Kpler data shows.”

At 3.75 mt, imports in the seven days commencing on February 26 were the highest weekly total since December 2023. Combined with the robust growth reported in January shipments, this resulted in an annual expansion of 31 per cent over the combined period of January and February, he explained.

“The recent upturn in thermal coal shipments may, in part, reflect some opportunistic buying after prices cratered in February; however, we also view this increase as the beginning of stock building ahead of the peak summer demand season. Stockpiling has also been aided by further strong production data from domestic miners,” Ellender said.

• Also read: Captive, commercial coal mines likely to produce 140 mn tons in FY24 as Govt pushes for higher output

Shipments to grow in March, April

“We continue to expect further m-o-m and y-o-y growth in thermal coal imports in March and April, with shipments expected to reach a seasonal peak in the second quarter,” Ellender projected.

Indonesia will remain the single largest source of imported thermal coal. A near 12-month high for Supramax dry bulk carrier time charter earnings on Indonesia-to-East Coast India coal trades, according to Baltic Exchange Assessments, is evidence of further robust cargo volumes to come, he added.

He emphasised that the Power Ministry’s announcement to extend the directive, mandating all domestic coal-fired utilities to use 6 per cent imported coal in their fuel mix, will provide further support to seaborne import demand.

India Ratings and Research (Ind-Ra) in a February 2024 report said that TPPs plant load factor (PLF), or capacity utilisation, is estimated to be in the range of 65-70 per cent in the medium term, considering the current and historical capacity addition trend and the forecasted energy demand in FY30 under the National Electricity Plan (NEP). It expects PLF to be around 68 per cent in FY24-FY25, with a 5-6 per cent y-o-y increase in power demand.

ndia Ratings and Research (Ind-Ra) stated in a February 2024 report that the Thermal Power Plants’ (TPPs) plant load factor (PLF), or capacity utilization, is estimated to be in the range of 65-70 percent in the medium term. This estimation considers the current and historical capacity addition trends and the forecasted energy demand in FY30 under the National Electricity Plan (NEP). Ind-Ra expects the PLF to be around 68 percent in FY24-FY25, with a 5-6 percent year-on-year increase in power demand.”

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