Coal news and updates

India coal crisis brews as power demand surges, record global prices bite

Indian utilities are scrambling to secure coal supplies as inventories hit critical lows after a surge in power demand from industries and sluggish imports due to record global prices push power plants to the brink.

Over half of India's 135 coal-fired power plants have fuel stocks of less than three days, government data shows, far short of federal guidelines recommending supplies of at least two weeks.

Prices of power-generation fuels are surging globally as electricity demand rebounds with industrial growth, tightening supplies of coal and liquefied natural gas.

India is competing against buyers such as China, the world's largest coal consumer, which is under pressure to ramp up imports amid a severe power crunch.

Rising oil, gas, coal and power prices are feeding inflationary pressures worldwide and slowing the economic recovery from the COVID-19 pandemic.

"The supply crunch is expected to persist, with the non-power sector facing the heat as imports remain the only option to meet demand but at rising costs," ratings agency S&P's unit CRISIL said in a report this week, adding it expected Asian coal prices to continue to increase.

"Coal inventory at (Indian) thermal plants will improve only gradually by next March."

Indian power producers locked in long-term agreements with distribution utilities cannot pass on higher input costs unless a clause to pass on such expenses is written into the contract.

Traders and officials at utilities said buying by power plants dependent of imported coal had been muted due to high prices.

India's average weekly coal imports during August through late September - when global coal prices rallied over 40% to all-time highs - dropped by over 30% from the average for the first seven months of the year, according to data compiled by Kplr.

The import total for the most recent week was under 1.5 million tonnes, the smallest in at least two years.

Websites of major coal importing state utilities did not show any new tenders seeking new cargoes this month.