Coal news and updates

Coal stocks at Indian power plants as of Tuesday have plunged significantly on the year as over 40 thermal power plants have less then seven days worth of stocks, according to the Central Electricity Authority's latest report published Thursday.

 

On August 22, 2016, only two power stations had coal stocks of less than seven days and the total coal stocks at thermal power plants were 29 million mt, which could support 22 days of power generation.

 

However, on Tuesday, 110 thermal power stations monitored by CEA had around 13 million mt of coal inventory that could support nine days of power generation, CEA data showed.

 

But only four plants have been put under the super-critical category (coal stocks of less than four days) and two plants under the critical category (coal inventory of less than seven days) by CEA.

"Power plants having less coal stock due to outstanding dues/supply more than committed quantity/not lifting offered coal are not shown as having critical/supercritical coal stock," the CEA report said.

 

However, market sources said there was a shortage of coal and units at some plants had been shut down.

 

Due to the shortage of domestic coal, there has been a surge in inquiries for imported thermal coal from Indonesia, South Africa and the US, they said.

 

The low coal inventories are down to a combination of factors ranging from heavy monsoon rains to transportation constraints.

 

According to a government source, the coal production by state-run Coal India Ltd is normally low during the second fiscal quarter (July-September) because of the monsoon season because several mines become flooded and this year the east of the country had very heavy rainfall and floods.

 

There are also transportation constraints due to fewer railway rakes making the movement of coal slow, he said.

 

Also, hydrophone availability, which usually goes up at this time of year, was low due to silting of some reservoirs caused by heavy rain. As a result there was more coal-fired power generation and hence more coal was burned, the source said.

 

The prioritizing of coal supplies to state-run plants has caused certain CIL mines to divert coal away from private-sector plants, sources said.

 

According to a Chennai-based source at a power plant, coal availability is poor and even supply of coal bought under e-auction is inconsistent. There was a problem with railway rakes too, he said, adding that he was only able to get only one rake in three days while earlier it used to be three rakes a day.

 

Some power plants would definitely resort to imports, this source said.

 

Meanwhile, a New Delhi-based trader said that CIL has done the best it could but that it required capital investment to open new mines to meet demand.

 

The trader said plants were running at low efficiencies but once power demand picked up, which he expected within the next 10-12 months, coal imports would once again make inroads because industry had to be competitive.

 

Meanwhile, a CIL source said that production would pick up after the monsoon and demand would be met.

 

During fiscal Q1, CIL curtailed its production because of high stocks at power stations and low demand.

 

The government source also said coal availability would start to pick up from next month and from November on all mines would be at peak production.

Source: platts