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September 01, 2019

Sector Report: Coal

This report is available to users in India for ₹40,000 + applicable taxes

 

Table of Contents

 

  • Summary
  • Non-coking coal
  • Coking coal
  • Non-coking coal
  • Coking coal
  • Long term price outlook

 

Summary

 

Rise in power demand, pick-up in industrial activities to boost domestic non-coking coal demand

 

Non-coking coal consumption is expected to clock a CAGR of ~5.2% to ~1,156 million tonnes (MT) in fiscal 2024 from 897 million tonnes in fiscal 2019, driven by ~6% CAGR growth in coal-based generation over the same period. Domestic supply is forecast to log a CAGR of 6-7% CAGR to 994 million tonnes from 711 million tonnes over fiscals 2020 to 2024. Growth in production will be driven by increase in production from Coal India Ltd (CIL) and commissioning of large captive coal blocks such as Pakri Barwadih, Parsa East and Kente Basan (15 MTPA each), primarily allotted to PSUs. Consequently, the share of imports in non-coking coal consumption is forecast to fall to 14% in fiscal 2024 from 20% in fiscal 2019. In absolute terms, non-coking coal imports are estimated to decline to 162 MT in fiscal 2024 from 183 MT in fiscal 2019.

 

Rise in steel production to stoke coking coal demand

 

Demand of metallurgical coking coal is expected to go up to 69 million tonnes in fiscal 2024 from 54 million tonnes in fiscal 2019 at a CAGR of ~4.5%, led by growth in steel production. On the other hand, domestic supply is estimated to remain low in spite of logging a CAGR of 5% to 17 MT in fiscal 2024. Consequently, the share of imports is forecast to remain high at 85-87% over the next five years. In absolute terms, coking coal imports are expected to increase to 62 MT in fiscal 2024 from 51 MT in fiscal 2019.

 

No major price hike expected; however prices to remain high on elevated e-auction premiums