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Hike In Coal Prices Affecting Margins For Domestic Base Metal Players: ICRA

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 Citing elevated prices of coal and metal price corrections as the headwinds affect margins, Icra stated that the agency has revised its estimates to 18 per cent of operating profitability of domestic players downward in the current fiscal year

The rating agency Icra on Thursday said that the earnings of coal will continue to have a severe impact on the margins of domestic base metal players. The earnings of the primary base metal industry would remain under pressure in the second half of the current financial year. Citing elevated prices of coal and metal price corrections as the headwinds affect margins, Icra stated that the agency has revised its estimates to 18 per cent of operating profitability of domestic players downward in the current fiscal year. 

Compared to the forecast of operating profitability for domestic players done in September last year, the agency noted that it was nearly three percentage points lower, whereas, in comparison to the fiscal year 2022, the forecast was 10 percentage points lower. Group Head, Corporate Sector Ratings, ICRA, Jayanta Roy said that some relief is expected in the fiscal year 2024 from better availability of coal linkages, the profitability is expected to stay range-bound at 19-20 per cent. 

Coal

India’s Coal Production To Touch 1 Bn Tonne: Govt

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Joshi also added that the coal production will be 900 million tonnes this year and the minister also assured the house that from 2024-25, India will stop the import of thermal coal

Union Coal Minister Pralhad Joshi informed Parliament on Monday said India’s coal production will touch one billion tonne in FY24 from 900 million tonne this fiscal, as the country gears up to stop the import of thermal coal by 2024-25.  

Also replying to queries in the Rajya Sabha during the Question Hour, Joshi said India’s domestic coal requirement will reach 1,500 million tonne by 2030, for which the country needs to increase its production.

Minister also attacked the opposition without naming it, he said that the previous government was riddled with scams while the current regime is ensuring energy security for India. 

Minister stated in the Rajya Sabha, “As far as production is concerned, in FY14, it was 566 million tonnes. This year, our total production will be 900 million tonne, which means all our PSUs are producing at the optimum level.”

According to the demand projections, the operations of the coal mines are ensuring the energy security of the nation while Atmanirbhar Bharat is scaling up the production and eventually reducing the import dependency. Various agencies across the country projected the coal demand to be reached 1500 million tonne per annum by 2030.

Joshi also added that the coal production will be 900 million tonnes this year and the minister also assured the house that from 2024-25, India will stop the import of thermal coal. 

Coal

Adequate Coal Stock At Thermal Plants With 25.6 Million Tonne Coal: Govt

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The total domestic coal production in October 2022 stood a bit strong at 18 per cent as against the same period of previous year with Coal India Ltd (CIL) recording a growth of 17.5 per cent. The contribution of domestic coal rake loading from all sources of CIL to the power sector stood at an all-time high of 296.5 rakes per day

The government said that the coal stock with domestic dry fuel-based power plants stood at 25.6 million tonnes, as on October 31. The situation of availability is being constantly monitored, it added.

The situation of coal supply to thermal plants is under control, government clarified.

In October, the domestic coal supply to the power sector was recorded at 12 per cent more as compared to the same period during last year. It is the highest ever supply to power sector during the first seven months of any financial year.

The total domestic coal production in October 2022 stood a bit strong at 18 per cent as against the same period of previous year with Coal India Ltd (CIL) recording a growth of 17.5 per cent.

During the first seven months of the current fiscal, the captive coal blocks produced 58.6 million tonnes, witnessing a growth of 37.5 per cent during the same period of last year, according to a media report.

The contribution of domestic coal rake loading from all sources of CIL to the power sector stood at an all-time high of 296.5 rakes per day. It is 19 per cent surge over the same period of the previous year according to the report.

An adequate supply to plants is being ensured by the Coal, Power, and Railway ministries are ensuring.

Recently, the ministry of Coal has opened 141 new coal blocks for commercial auction with an aim to boost coal production capacity. Also, it is coordinating with the state governments and related central ministries to operationalise mines auctioned previously, on fast track basis.

manufacturing

Core Sector Output Witness 7.9% Surge In Sep

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In the last year during September, the growth rate stood at 5.4 per cent. Prior to that, it recorded 4.1 per cent in August. In June when the output expanded by 13.1 per cent, made it the previous high

The production of eight infrastructure sectors has witnessed a surge by 7.9 per cent during September, keeping it the highest during last three months. This has resulted due to better performance by coal, fertiliser, cement and electricity segments, as per the official data released on 31 October. 

In the last year during September, the growth rate stood at 5.4 per cent. Prior to that, it recorded 4.1 per cent in August. In June when the output expanded by 13.1 per cent, made it the previous high. The growth in the production of eight infrastructure sectors viz. coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity was recorded at 9.6 per cent in April-September this year as against to 16.9 per cent a year ago.

The output of coal, fertiliser, cement and electricity during September went up by 12 per cent, 11.8 per cent, 12.1 per cent and 11 per cent, respectively. At the same time, the refinery products’ output surged by 6.6 per cent as against 6 per cent in the same month last year. Whereas, crude oil and natural gas production squeezed by 2.3 per cent and 1.7 per cent, respectively, during the month under review. 

The commerce and industry, Minister Piyush Goyal through a tweet said, ” A reason why India is being called a global bright spot is the strength of its core industries. Output of 8 core industries in September grew 7.9 per cent.” 

Investment Information and Credit Rating Agency of India Limited (ICRA), Chief Economist Aditi Nayar commenting on the data said that the core sector growth rebounded to a robust 7.9 per cent in September, after considering two months of moderation.

With this growth it may be expected that the IIP (index of industrial production) may revert to a modest 4-6 per cent YoY (year on year) rise in that month, from the unpredicted contraction in August 2022. Most probably, the IIP data for September is expected to be outr in the second week of November by the government. The contribution of eight core industries accounts to 40.27 per cent in the IIP.

Coal

India Catching Up To China In Thermal Coal Imports

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India’s thermal coal imports are expected to rise 7 per cent on year to 158 million in 2022, and a further 3 per cent to 163 million tonnes in 2023

India is fast catching up with China in its thermal coal imports, as the world’s two biggest overseas buyers of the power generation fuel adjust purchases to align them with the varying trajectories of their economic growth.

India, widely seen as one of the last remaining major growth markets for the fuel, has stepped up buying from Indonesia and Russia after the invasion of Ukraine, which Moscow calls a special operation.

India’s thermal coal imports are expected to rise 7 per cent on year to 158 million in 2022, and a further 3 per cent to 163 million tonnes in 2023, consultancy Wood Mackenzie said.

In contrast, shipments of the fuel resource into China, the world’s biggest importer, could fall to 182 million tonnes in 2022 and 176 million tonnes in 2023, from 246 million tonnes in 2021, Woodmac said.

Coronavirus lockdowns stifled demand for the fuel in China while a steep rise in electricity demand triggered a spike in India’s imports.

India’s economy recovered from weak consumer demand to grow at the fastest pace in a year in the June quarter. On the other hand, China narrowly avoided contracting in the second quarter and has grown at a tepid 2.5 per cent this year due to COVID-19 lockdowns in many parts of the country.

Indian thermal coal imports grew about 12 per cent in the eight months ended August 2022 to 114.2 million tonnes, according to Indian consultancy Coalmint. China’s overseas purchases of the fuel resource in the first seven months of 2022 fell 26 per cent from a year earlier to 106.36 million tonnes, government data showed.

Analysts at Indian consultancies CRISIL and ICRA expect India’s coal imports for the year ended March 2023 to rise 16 per cent-20 per cent.

Russia displaced the United States to become India’s fourth largest supplier of seaborne coal in 2022. The share of Russian supplies of thermal coal to China also increased, according to government data.

“We observe a shift away from South African imports towards stronger imports from Russia gaining momentum and this is driven by the large discount for Russian coal,” Jake Horslen, analyst at consultancy Energy Aspects said.

“This mid-to-high calorific value coal demand in India is for more industrial uses, like sponge iron production.”

India’s thermal coal imports have risen 28 per cent in the six months since Russia sent tens of thousands of troops into Ukraine, Coalmint data showed. Indonesian supplies to India have risen 43.6 per cent in 2022, at the expense of supplies from Australia, which fell 28.5 per cent, and South African supplies, which declined by a fifth.

DOMESTIC OUTPUT

Indian imports have primarily been driven by a surge in electricity demand, which is seen growing at the fastest pace this year in at least four decades.

While increasing electricity use has resulted in more imports by utilities, it has also pushed state-run Coal India to boost supplies to power plants at the expense of the non-power sector, government data showed.

“Logistical bottlenecks in transport and priority supply to the power segment has led the non-power sector to continue dependence on imports,” said Hetal Gandhi, director at CRISIL Research.

Chinese imports were lower due to a higher domestic output, lower power demand and Beijing’s price cap on domestic thermal coal, which made imports far more expensive than coal produced locally.

While India’s overall thermal coal imports will be higher in 2022, shipments during the last quarter are expected to be lower compared with the second and third quarters.

“We are now seeing a reversal in import trends, with August 2022 imports declining sequentially over July 2022,” said Ritabrata Ghosh, an analyst at ICRA.

“As the domestic coal production picks up post the monsoon, the supply tightness is expected to somewhat improve,” Ghosh said.

(Reuters)

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India’s Power Shortage At 1% In April-June This Fiscal: R K Singh

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In another reply, the minister told the House that 325.62 BU or 75 per cent of the total power generation was from thermal projects, which include coal, lignite, gas and diesel

India witnessed a power shortage of one per cent in the April-June period this fiscal, with an electricity supply of 400.65 billion units (BU) against the requirement of 404.76 BU, Parliament was informed on Tuesday. “Further, during 2022-23 (April-June), against the requirement of 404.76 Billion Units (BU), the energy supplied was 400.65 BU. There was a shortage of 1 per cent of energy requirement,” Union Power Minister RK Singh said in a written reply to the Rajya Sabha on Tuesday.

The minister explained to the House that the gap is generally on account of factors other than inadequacy of power availability in the country, such as constraints in the distribution network, financial constraints, commercial reasons, forced outage of generating units etc. In another reply, the minister told the House that 325.62 BU or 75 per cent of the total power generation was from thermal projects, which include coal, lignite, gas and diesel. Renewable energy, including large hydro plants, output was 92.85 BU or 21.6 per cent of total power generation in the country.

About the coal shortage, the minister informed that as of March 31, 2022, the coal stock was 25.6 Million Tonnes (MT) and has increased to 28.4 MT as of July 17, 2022, which is about 50 per cent of the normative coal stock required to be maintained by the TPPs (third-party providers). The coal stock available as of July 17, 2022, is sufficient to run these power plants for an average of 10 days at 85 per cent plant load factor (PLF), the minister stated. The coal stock available with the thermal power plants, including import, is monitored by Central Electricity Authority (CEA) on daily basis. In another reply, the minister said that a scheme for viability gap funding for Battery Energy Storage Systems (BEEs) and Pump Storage Projects (PSP) is under consideration by the government.

The PLF (plant load factor or capacity utilisation) of coal/lignite-based power plants of capacity 25 MW and above during the year 2021-22 was 58.87 per cent. In 2022-23, the electricity demand has increased and power plants are generating electricity as per the schedule given to them. The PLF for coal/lignite-based power plants in 2022-23 up to June 2022 is around 69.5 per cent, the minister stated.

(PTI)

Coal

Coal India To Raise Coal Stock At Thermal Plants To 45 Mn Tonnes By Fiscal-End

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Coal India Ltd (CIL) is aiming for the highest-ever closing stock at power plants, the PSU said

State-owned CIL on Thursday said it has drawn up plans to boost coal stock at thermal power plants to over 45 million tonnes (MT) from its own sources by the end of the ongoing fiscal.

Coal India Ltd (CIL) is aiming for the highest-ever closing stock at power plants, the PSU said in a statement.

“The previous high was 45 MT in 2020,” it said.

In a workshop held on December 11 in Kolkata with senior officials of CIL and its subsidiaries, Coal Secretary Anil Kumar Jain underscored the importance of shoring up coal stocks at power plants with indigenous coal where CIL is to take the lead role.

The intent is to maintain a steady supply of coal to power plants during summer and monsoon months to avoid the disproportionate demand-despatch scenarios. The focus is also to reduce coal imports in the substitutable category.

Coal stock enhancement to 45 MT at thermal power plants by the fiscal end is based on a projection where the average coal-fired power generation of the previous five years, from December to March, was considered and increased by 7 percent.

The volume of coal required to meet this generation and additional stock build-up was then worked out.

With current indigenous coal stock of around 20 MT at power plants (December 14), a major portion bolstered by CIL, the company is focused on lifting its component to 25 MT by the end of the current month. Gradually, the stock would be scaled up to 45 MT by March-end.

Though coal sale outstanding dues from state and central power gencos stepped down till November-end, the dues are still substantial, especially from state generators. This creates a liquidity crunch in some of CIL’s subsidiaries like WCL, ECL, and BCCL which require a large capex push.

Despite this, CIL prioritised supplies to power plants to satisfy their increased appetite for coal on the back of the recent spike in demand. CIL’s current despatch trend indicates a record high supply to the power sector by the closure of the fiscal, overtaking 491 MT of FY’19.

CIL’s despatches to power plants peaked to a record 340 MT progressive ending November, posting 23 per cent growth with volume increase of 62.6 MT, on a year-on- year comparison.

(PTI)

Coal

Seven Firms, Including JSW Steel, Submit Bids For Coal Blocks

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These coal mines were also offered in the first attempt launched on March 25 this year and had fetched single bids.

JSW Steel and Adhunik Power & Natural Resources are among seven companies that have submitted bids for four coal blocks put up for sale under “second attempt” of auction process for 11 mines for commercial mining.

These coal mines were also offered in the first attempt launched on March 25 this year and had fetched single bids.

“A total of 7 companies have submitted their bids in the auction process,” the coal ministry said in a statement.

The seven firms are Auro Coal Pvt Ltd, JSW Steel, MP Natural Resources Pvt Ltd, Adhunik Power & Natural Resources, Assam Mineral Development Corp Ltd, Virtuous Mining Ltd and Twenty-First Century Mining Pvt Ltd.

Total seven bids were received by the ministry for four coal blocks namely Beheraband North Extn, GondbaheraUjheni East, Lalgarh (North) and Tokisud Block II.

“A total of 7 bids have been received for 4 coal mines,” the ministry said.

The online bids were decrypted and opened electronically in the presence of the bidders, it said.

The auction process for 11 coal mines under second attempt of 12th tranche of auction under the Coal Mines (Special Provisions) Act, 2015 and second attempt of 2nd tranche of auction under the Mines and Minerals (Development and Regulation) Act, 1957 for sale of coal was launched by the coal ministry on September 27.

The last date of submission of technical bid was November 29.

“As part of the auction process, technical bids comprising online and offline bid documents were opened today…in the presence of the bidders,” the ministry said.

(PTI)

Coal

Supply Of Coal To Power Plants In Nov More Than Consumption: Coal Minister

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The minister further said that there was no shortage of domestic coal to the power sector

The supply of coal to power plants in November is more than the consumption, resulting in rise in stock of dry fuel at power plants, and this trend is likely to continue in the coming months, Parliament was informed today. Several power plants of the country reportedly faced coal shortages during September and October this year.

“The coal supply to power plants in the month of November 2021 is more than the consumption, resulting in increase in coal stock at power plants end,” Coal Minister Pralhad Joshi said in a reply to a query in the Rajya Sabha.

The minister further said that there was no shortage of domestic coal to power sector. In fact, Coal India Ltd (CIL), the largest supplier of coal to the power sector, has dispatched around 54 million tonnes (MT) more coal during April-October period in comparison to the same period of last year, he said. 

CIL has dispatched 291.72 MT coal during this period, against 237.75 MT during the same months last fiscal, the minister said.

However, due to increased demand of power, less power generation by imported coal-based power plants and some interruption in supply of coal due to heavy rains, the coal stock at the power plants depleted to 7.2 MT (sufficient for 4 days) as on October 8, he said.

Subsequently with increased coal supplies, the coal stock has started increasing and has now reached 16.6 MT (sufficient for nine days) as on November 24.

Besides this, the coal stock at CIL pithead end is 32.30 MT as on November 24. Hence there is no coal shortage, he said. 

(PTI)

Coal

Coal India’s Price Hike Plan Likely To Be Delayed

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The agenda of price hike is unlikely to be placed before the upcoming board meeting on November 12 as the board has not yet received the go-ahead from important stakeholders in the wake of the chaos of coal shortage since last month, though the global price of coal had risen significantly

Coal India’s plan to raise prices, which has been pending for some time, is likely to be delayed further as the mining major has failed to secure the nod of key stakeholders amid an outstanding of Rs 24,000-25,000 crore pushing the company into a tough situation, a source close to the development said on Sunday.

The recent coal crisis at power plants in several parts of the country has caused the dry fuel producer to relax payment terms and push coal to ensure that there is the least shortage of power to keep the economy on track.

The agenda of price hike is unlikely to be placed before the upcoming board meeting on November 12 as the board has not yet received the go-ahead from important stakeholders in the wake of the chaos of coal shortage since last month, though the global price of coal had risen significantly, the source told PTI.

Unrestricted supply of the dry fuel amid crisis in power plants has resulted in a further jump in dues that has already reached around Rs 24,000-25,000 crore, the source said.

Coal dispatch to the power sector has increased by 27.13 percent to 59.73 million tonnes in October, owing to a spurt in power demand amid an unprecedented rise in import prices. The coal major was attempting to reach 2 million tonne per day production but till November 6 the average production was 1.6 million tonne.

States such as Maharashtra, Rajasthan, Madhya Pradesh, Karnataka, West Bengal, and Tamil Nadu owe huge sums of money to Coal India, the source said adding that price hike is inevitable with pending wage revision that will directly increase its wage cost by around 10 percent.

Without increasing the price, it will not be possible for Coal India to absorb the wage hike. Already, some subsidiaries are facing cash problems due to high dues and had to resort to loans, the source said.

The Kolkata-headquartered company had last hiked coal prices in 2018. Its current average regulated price realisation is Rs 1,394 per tonne.

(PTI)

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