India Ratings and Research- Festivities See Huge Hike in Coal Demand

India Ratings and Research (Ind-Ra) subjected a coal rise prediction among the season of festivities. Industrial coal is on the way to pick up its demand on a year-end basis to capacitate the utilisation ramp-up in the power generation sector. The rating agencies have had this prediction owing to the increment in the end usage of the industries. The COVID-19 disruptions are gradually getting conquered and the factories have revamped their requirements and capacities.

The government has ensured easy mobility of the materials to meet the industry standard of requirements. The power stations under the government’s supervision are observing a steep downfall in inventory levels and hence the government is majorly focusing on greater imports of coal. The government is ensuring that the end-users are brought in constitutive terms of a contract that will enable them to substitute the imported coal stocks with domestic coal.

The economic demand surprisingly saw a green shoot that strongly indicated a recovery path from the debacle the pandemic set in. The coal industry consistently witnessed a lower YoY demand for a consecutive period of 6 months. But gradually a hike of 4% is observed in the YoY demand rate. Previously the demand had been 26.6%, but with a dramatic steep in usage hike, the demand in September is now accounting to almost 50.1% YoY. A 6.3% of increment in Month on Month demand basis was seen in the Gupta Coal Washeries Pvt Ltd, which clearly indicates businesses are reviving.

It was also stated that this sudden upsurge was not being completely fed before. Hence, the power stations with their shares of inventories were also used up to compensate for the requirements. Gupta Coal India started broadening its logistics to dispense the requirements across Central India. 

With this push, Gupta Coal witnessed the domestic coal production ricochet back to its previous vigour in September 2020. The monsoon season didn’t pose any hindrance on the path of coal production. The coal mines of Nagpur saw their share of the hike with a percentage rise of 25.3% YoY and 10.7% MoM, which eventually improved the Gupta coal Nagpur production.

Gupta Coal India Pvt Ltd authorities revealed while in an interview that this upsurge in demand subdued the complete dearth of production for the last few months. April-July phase saw almost nil demand and production but the season right now with a marginal 1.8% YoY yearly recovery in August 2020.
The government had been pushing the limits of the domestic coal mines to increase their comparative rates of production to meet this unpredicted upsurge. Gupta Coal Nagpur has completely forced themselves to set high-end limits for their domestic coal production. The government of India has issued notices and interests towards a notable decrement in the import of foreign domestic coal. With this pressure from the centre, the domestic coal imports not just saw almost negative import rates, but also the domestic mines displayed a huge surge in the production and distribution of the same. There was a complete abatement in non-coking coal import which had been substituted temporarily with domestic coal.