Domestic coal imports likely to have been lower in July 2020 due to the low domestic demand from end-user industries amid the COVID-19 outbreak, said India Rating
Mumbai, August 18: According to a report by India Ratings, demand for domestic coal is likely to be subdued in the second quarter of the current financial year due to lower demand from end-user industries amid the COVID-19 pandemic and high inventory at power stations.
Domestic coal production remained subdued for the third consecutive month in June 2020 year-on-year as well as month-on-month due to low power demand and higher inventory at power stations, due to which the coal offtake reduced in June 2020 year-on-year but improved month-on-month with the gradual relaxation in lockdown norms, the rating agency said.
“Despite gradual relaxation in lockdown norms, demand over the second quarter of FY21 shall be further dampened by the onset of the monsoon season. Overall, domestic coal imports are also likely to be lower in Q2 FY21 year-on-year”, the report said.
Domestic coal imports are likely to have been lower in July 2020 due to the low domestic demand from end-user industries amid the COVID-19 outbreak, according to Ind-Ra. Also, the government has mandated Coal India to replace at least 100 million tonnes (MT) of avoidable imports with domestic coal in 2020-21 to reduce imports.
The import’s share in the total domestic consumption reduced to 22% in June 2020 from 28% in FY20. While non-coking coal imports reduced 34% y-o-y, coking coal imports declined 41 per cent y-o-y,” the report said.
The agency, however, sounded optimistic by the commercial coal mining and the associated reforms announced by the government, stating that it would help in shaping the coal sector towards a more deregulated and competitive scenario in the long run.
