Higher power demand lifts India's June coal imports

India's thermal coal imports rose in June, from a year earlier, in line with an increase in coal-fired generation to cater for the rise in power demand during the peak summer period.

The south Asian country imported 14.09mn t of thermal coal in June, up by 4.2pc from a year earlier, according to data from shipbroker Interocean. But imports fell from 16.70mn t in May. Imports during January-June were up at 89.64mn t, from 81.13mn t in the same period a year earlier.

The rise in imports underscored India's position as the world's second largest thermal coal importer after China, and as a key buyer of Indonesian coal, especially as international prices remained largely weak. Argus assessed Indonesian GAR 4,200 kcal/kg coal for Supramax cargoes at $51.97/t fob Kalimantan on 26 July, the lowest level since September 2023.

The trend in imports followed an increase in demand from Indian utilities to fuel coal-fired generation — which meets most of the country's power requirement. The year-on-year increase in receipts of seaborne coal was in line with the rise in coal-fired generation at 113.41TWh in June, up from 103.32TWh a year earlier, according to data from the Central Electricity Authority (CEA). Imports dipped on the month as coal-power generation slipped last month from 119.64TWh in May.

The year-on-year rise in imports also comes as hydropower generation eased on the year after rising in May. India's hydropower generation edged lower to 14.17TWh, from 14.33TWh a year earlier, although rising from 12.6TWh in May, according to CEA data. The year-on-year easing in hydropower output, supported the increase in coal-fired generation, lifting utility coal demand and exacerbating inventory drawdown at Indian power plants. Combined coal inventories at Indian power plants were at 46.88mn t as of 30 June, down from 47.86mn t as of 31 May, CEA data show. Stocks by the end of June were sufficient for over 16 days' worth of consumption.

A steady increase in domestic coal supplies to power plants prevented a sharper drop in coal stocks at power plants, following efforts by Indian authorities to ensure stable power supply to meet the peak power demand during the summer. The government measures include imported-domestic coal blending by utilities that run on local coal. Domestic coal supplies to the power sector rose by 8.4pc from a year earlier to 70.75mn t in June, although it fell from 74.22mn t in May. Delhi has also asked power plants that run on imported coal to keep generation levels high, supporting the prospect of higher imports from these utilities. These coal-fired plants have a combined capacity of 17.5GW.

Import mix

India's coal imports from Indonesia rose to 8.04mn t in June, up from 5.89mn t a year earlier, making Indonesia the country's primary source of imported coal, according to Interocean data. Indonesian coal accounted for 57pc of India's overall thermal coal imports in June.

Utility demand for Indonesian coal increased because most Indian power plants' boilers are designed to process it easily, and it is also preferred for blending. The receipts from Indonesia, however, slipped on the month from 9.48mn t in May.

Imports from South Africa, a source favoured by coal-consuming industries such as sponge iron, fell by 3.2pc on the year to 2.63mn t, though up from 2.49mn t in May. South Africa is India's second-largest coal supplier after Indonesia, accounting for about 18.5% of overall imports. Imports from Russia increased by 4pc year-on-year and by 2.1pc month-on-month to 958,200t in June.

Indian sponge iron industries prefer South African coal, given the coal's high fixed carbon content. Some cement producers also prefer coal of this origin. The drop in imports from a year earlier comes as local coal supplies to sponge iron industry rose by 7.5pc on the year to 760,000t, according to data from the Indian coal ministry. Indian sponge iron output rose to 4.30mn t in June, up from 4.14mn t a year earlier, data from the World Steel Association show. Local coal supplies in June to the cement sector fell by 29.44pc on the year to 620,000t.

Thermal coal imports from Mozambique rose by 1pc from a year earlier to about 713,000t in June, while receipts from the US fell by 14pc from a year earlier to 604,150t.

By Saurabh Chaturvedi

India's coal-fired generation TWh

India's thermal coal imports (mn t)