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Power crunch rippled its way to India

China extends

India’s domestic coal supply is drying up, including Indonesia’s

China turned to India for coal to generate power when it went partially dark. The latter is now suffering from shortage and Indonesia’s stock is diminishing. To make matters worse, India’s internal bottlenecks hindered distribution.

Soaring demand with dwindling supply
China’s drastic iron ore policies paved the way for coal prices to rebound, with Indonesia and Russia dominating the markets. Statistics from S&P Global Platts Analytics revealed India’s average power demand surged 23 GW on year to 186 GW from 1-12 August 2021. The analyst anticipated its average power demand from October to December to be at 167 GW, with coal-powered generation at 126 GW, translating to about 12 GW higher year-on-year.

While this boded well for coal, India’s domestic supply reached a deadlock despite (state-owned) Coal India’s increased production. Industry sources said congestions hindered transportations to power plants. The company reportedly produced 166.6 million mt of coal from April – July 2021, up 5 per cent year-on-year. In July, its output was up 14 per cent year-on-year at 42.6 million mt.

At risk of going dark
India is currently battling a shortage with domestic stocks sinking to a record low. Its total stock stood at 37.41 million mt at the start of 2021, according to the country’s Central Electricity Authority (CEA). This has dropped to 8.317 million mt as at 27 September 2021; sufficient for only 5 days! CEA’s data as at 27 September 2021 also showed that 101 coal-fired plants had stockpiles worth less than 8 days, and as many as 89 plants left with 4 or lesser days’ worth of stock. The capacity of these 101 plants amounts to 125.53 GW which is 75 per cent of the total capacity of 167.586 GW.

India imports its bulk from Indonesia, Australia, and South Africa, apart from Colombia, Russia, Kazakhstan

and Mozambique. Market observers deduced India’s failure to plan its inventories resulted in today’s catch-22 between low supply and high prices. Data from Iman Resources showed India’s total coal imports jumped 8.37 per cent between January and June. Imports from Indonesia rose 1.15 per cent the same period to 42.9 million mt. Imports from Australia stood at 12.32 million mt, and the United States with 7.84 million mt. Though Indonesia is a popular supplier, the country is also a victim of bad weather which thwarted production. Sources disclosed some mines declared force majeure, and decreased output by 10 – 40 per cent. Another Indonesian miner added that their low calorific value coal stock were sold out.


Marine Online News Team
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