Coal news and updates

Core sector growth fell sharply to a five¬month low in May after hitting a 16¬ month high in April, indicating further softening in already weak industrial activity. The core sector output expanded 2.8% in May, data released by the government on Thursday showed, reversing a five¬month trend of rising output growth. Core sector output grew 8.5% in April.

The eight infrastructure sectors that make up core sector index — coal, crude oil, natural gas, refinery products, fertilsiers, steel, cement and electricity — together have a 38% weightage in the Index of Industrial Production (IIP). This fall in growth suggests industrial production growth may not improve from 0.8% contraction in April. IIP numbers for May will be released on July 12.

A broad¬based decline in growth, except for coal and fertilisers, dragged down overall growth. Coal output rose 5.5% in May after a 0.9% contraction in April. Ahead of the kharif sowing, fertilsier production rose 14.8% in May.

Barring these two sectors, there was very little to cheer. Electricity generation growth slipped to 4.6% in May from 14.7% in March, as water scarcity reduced hydel and thermal power generation. The two infrastructure sectors, steel and cement, also saw a moderation in growth, suggesting a tepid investment activity and weak construction sector.

The hydrocarbon sector performed poorly with crude oil (¬3.3%) and natural gas (¬6.9%) reporting decline in output and refineries posting a tepid 1.2% rise in May after a 17.9% rise in April.

"Overall industrial activity is relatively weak. A cause for concern is weak capex, construction and realty. Road projects are picking up, which might offset in a few months," said Axis Bank chief economist Saugata Bhattacharya.

Source: Economic Times