India’s thermal coal imports declined to a 12-month low in August 2024, reflecting the seasonal weakness in power demand as widespread monsoon rains brought down temperatures and the need to run cooling equipment.
Widespread rains, particularly in the north and northwest parts of the country, pushed up hydropower generation and lowered the demand on thermal power plants (TPPs).
According to energy intelligence firm Kpler, India’s seaborne thermal coal imports fell by 14 per cent on a monthly basis last month to 11.82 million tonnes (MT). The shipments were almost flat on an annual basis.
Seasonal change
Zhiyuan L, dry bulk commodity analyst at Kpler, saidthe decline in seaborne thermal coal imports was mainly related to the ongoing monsoon rains.
“Above-normal monsoon rains reduced cooling demand and, thus, the overall power and coal consumption,” he added.
According to Crisil Market Intelligence & Analytics, electricity demand in India is estimated to have declined by around 5.3 per cent Y-o-Y to around 144 billion units (BUs) last month even as the country received about 7 per cent excess rainfall during the month. This follows a 6.7 per cent Y-o-Y rise in electricity demand in July 2024.
Power generation is estimated to have declined by around 3 per cent Y-o-Y at about 155 BUs in August 2024. Coal and renewable energy production contracted around 3 per cent and about 13 per cent, respectively, during the month.
In contrast, hydropower generation surged roughly 7.6 per cent Y-oY after two consecutive months of decline, as many states received ample rainfall, Crisil said.
“With the southwest monsoon covering more parts of the country in August, water level in 31 reservoirs and hydroelectric projects ticked up around 1 per cent over a year earlier. Thus, the share of coal and renewable energy in power production increased marginally on-year, while that of hydropower grew to about 15 per cent from around 13 per cent,” it added.
Imports to pick up
“Despite that, the southwest monsoon is expected to be prolonged this year rather than follow the normal pattern of starting to retreat from northwestern India in mid-September. We expect thermal coal imports in September to rebound from the August low as continued weather-related disruptions in domestic coal production and potential restocking efforts following the massively dropped inventories at power plants will likely support the upside for imports,” Zhiyuan said.
In August, domestic coal production experienced a rare 7.51 per cent Y-o-Y drop and stockpiles at power plants have dropped sharply by over 22 per cent, compared to the March peak, he added.
India’s coal production and despatch fell to its lowest in over a year and a half with the growth rate slipping into negative territory during August 2024 as widespread and above-normal precipitation impacted mining and mobility.
According to Coal Ministry data, coal production fell by 7.5 per cent Y-o-Y and more than 15 per cent M-o-M to 62.76 MT, which is the lowest since March 2023.
Similarly, despatch or supply of coal — mostly to thermal power plants (TPPs) — declined 6.35 per cent Y-o-Y and 13 per cent M-o-M to 70.39 MT, which is also the lowest in over 18 months, barring in September 2023, when despatch stood at 70.31 MT.