Coal imports to increase due to lower hydro power generation

21 Jun 2024 CW Team

Data from S&P Global Commodities at Sea indicates that India has imported around 85 million tonnes of thermal coal so far in 2024. S&P Global Commodity Insights reports that India's coal imports are likely to increase in the first half of the fiscal year due to anticipated lower hydropower generation, caused by reduced water levels in reservoirs.

Pat See Khoo, Senior Analyst- Global Power and Renewables, S&P Commodity Insights, stated, "The first half of 2024 could potentially show stronger coal imports than the second half amid a likely lower hydropower generation because of the impact of El Nino."

Irregular rainfall in the past fiscal year has led to decreased water levels in India's primary reservoirs; potentially further reducing hydropower generation during the summer. As of June 13, the water level in 150 key reservoirs stood at 38.491 bcm, which is 22% of the total live storage capacity. This level is 21% lower than a year ago and 8% below the 10-year average.

In April, hydropower generation in India was 8,109.14 GWH, down 7% from the previous year. However, it increased to 12,259.58 GWH in May, up 6.9% from the same period last year.

India produced 997.4 million tonnes of coal in FY24, an 11.67% increase from the previous year, while coal imports stood at 265 million tonnes, up from 245 million tonnes in FY23.

India has focused on boosting its economy by increasing capital expenditure in infrastructure, significantly driving steel demand. Consequently, the demand for coking coal, essential for steel production, has risen sharply. India imports nearly 70% of its coking coal needs due to the lack of indigenous supply.

With plans to expand steel capacity to 300 million tonnes per year by 2030, coking coal demand is set to grow further. To reduce coking coal imports, the government plans to open a washery in Coal India's subsidiary, Bharat Coking Coal Ltd, with a capacity of 2 million tonnes, and launch three new coking coal mines this fiscal year. However, S&P Global Commodity Insights still forecasts that India?s coking coal imports will reach 100 million tonnes by 2030. (Source: Financial Express)

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Despite the government's push to increase coal production, which is projected to reach 1.08 billion tonnes this fiscal year, India is expected to see a rise in coal imports in the first half of the year due to lower hydropower generation. Data from S&P Global Commodities at Sea indicates that India has imported around 85 million tonnes of thermal coal so far in 2024. S&P Global Commodity Insights reports that India's coal imports are likely to increase in the first half of the fiscal year due to anticipated lower hydropower generation, caused by reduced water levels in reservoirs. Pat See Khoo, Senior Analyst- Global Power and Renewables, S&P Commodity Insights, stated, The first half of 2024 could potentially show stronger coal imports than the second half amid a likely lower hydropower generation because of the impact of El Nino. Irregular rainfall in the past fiscal year has led to decreased water levels in India's primary reservoirs; potentially further reducing hydropower generation during the summer. As of June 13, the water level in 150 key reservoirs stood at 38.491 bcm, which is 22% of the total live storage capacity. This level is 21% lower than a year ago and 8% below the 10-year average. In April, hydropower generation in India was 8,109.14 GWH, down 7% from the previous year. However, it increased to 12,259.58 GWH in May, up 6.9% from the same period last year. India produced 997.4 million tonnes of coal in FY24, an 11.67% increase from the previous year, while coal imports stood at 265 million tonnes, up from 245 million tonnes in FY23. India has focused on boosting its economy by increasing capital expenditure in infrastructure, significantly driving steel demand. Consequently, the demand for coking coal, essential for steel production, has risen sharply. India imports nearly 70% of its coking coal needs due to the lack of indigenous supply. With plans to expand steel capacity to 300 million tonnes per year by 2030, coking coal demand is set to grow further. To reduce coking coal imports, the government plans to open a washery in Coal India's subsidiary, Bharat Coking Coal Ltd, with a capacity of 2 million tonnes, and launch three new coking coal mines this fiscal year. However, S&P Global Commodity Insights still forecasts that India?s coking coal imports will reach 100 million tonnes by 2030. (Source: Financial Express)

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