Coal output marginally up in May but continues to fall every year

India's coal production picked up marginally by 3 per cent in May 2020 over the previous month as India slowly opened up for businesses, but it was still down sharply from year-ago levels. On a y-o-y basis, coal output fell by 15 per cent in May 2020.

Story: Shivani Sharma
Design: Pragati Srivastava

India's production of coal grew by a marginal 0.1 per cent to 729.1 million tonnes (Provisional) in FY20 as compared to 7.9 per cent growth in FY19, mainly due to prolonged excessive rainfall hampering mining operations. Coal production could have possibly registered a decline if not for increased coal output in the final three months of FY20.

Power sector consumes about 70 per cent of total coal produced in India. Electricity generation fell 25.4 per cent y-o-y to 81.5 billion units in April. Coal-based power generation fell by a sharper 31.7 per cent y-o-y in April 2020. Thermal plant load factor (PLF) declined to 42.4 per cent in April 2020 on account of lower demand.

Inventories of coal at thermal power plants have risen sharply in the last three months and power utilities are now refraining from purchasing more coal. As on June 1, inventory of coal with power plants stood at 49.5 million tonnes, sufficient for 29 days.

The country imported 243 million tonnes of coal in FY20, up by 3.3 per cent over FY19. Coal India Ltd. (CIL) has been mandated by the government to replace at least 100 million tonnes of substitutable imports with domestically-produced coal in the ongoing fiscal.

E-auction coal prices continued to fall for the second consecutive year ended FY20 in line with fall in international coal prices, sufficient coal stocks and slump in demand.