Coal imports by India are set to reach 164 million tonnes (MT) against the earlier forecast of 158 MT due to historic low levels of stocks at Coal India and power plants amid surging industrial demand, says a report.
India's spot market prices, for both coal and power, are expected to remain strong in the coming months as continuous industrial production growth is pushing demand, while supply remains tight, the report by Wood Mackenzie projected.
"We have increased India's imports for thermal coal from 158 MT to 164 MT in 2018 with a further upside risk of 3-4 MT as coal stocks at Indian power plants and Coal India Limited are at historically low levels, Wood Mackenzie's coal principal analyst Pralabh Bhargava said.
"Growth in domestic coal production and dispatches can only partially meet the growing demand for coal, which is resulting in increased reliance on imports, said Bhargava.
With a decade-low stockpile at Coal India's mines and more than half of the plants with a supercritical level of less than seven days' stock, the reliance on imported coal for several power plants will increase the flow of imports into India.
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With the power sector increasingly relying on imports, we expect the rally in Indian imports to continue till early next year, he said.
"Industrial production in India has grown at an average of more than 7 per cent this year. This has led to an increase in power generation by 6 per cent over January to August 2018, with August achieving a record high of 122 TWh of power generation, said Bhargava.
Cement production was up 16 per cent and steel production 4 per cent for the same January-August period.
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