S&P Global Commodity Insights does not expect a coal supply shortage at power plants in India this summer as most of them are well stocked and coal prices may hover around the current level of $70 a tonne provided there are no major weather disturbances.

Deepak Kannan, Head of Global Coal – Pricing, S&P Global Commodity Insights, told businessline that demand-supply in the coal sector is well balanced and the inventory in power plants in India is about 25 days against the usual 7 days due to timely imports and improved domestic supplies.

However, the key unpredictable challenges are rain in Indonesia, the El Nino effect and a sudden surge in coal demand, he said.

Investments down sharply

Fresh investment globally in coal mining expansion has come down sharply due to lenders’ focus on greenhouse gas emission projects. Despite the funding crunch, coal will remain in demand at least for the next two decades, he added.

Optimisation of sourcing from Russia, Tanzania and Columbia has brought down the cost of thermal coal imports to India. In fact, Russia offers a discount of $10-20 a tonne on shipments to India.

There may be a slight blip in coal prices between June and September when China re-enters the market to buy thermal coal, he said.

The Government has asked power generation companies not to retire coal-fired power plants until 2030, so as to meet the country’s power demand.

Also read: Coal use climbs worldwide despite promises to slash it

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