Rains may cool surge in coal shipments to India

Rains may cool surge in coal shipments to India

Sub: Geo

Sec: Eco geo

Context:

• Coal shipments to India rose 10 percent year-on-year (YoY) between January and August 2024, outpacing the 8 per cent YoY increase in domestic coal mining.
• However, experts suggest that the growth in shipments may slow during the rest of the year, as demand cools.

India’s coal import:

• India, the second largest coal importer globally.
• Indonesia is the source for 45 percent of India’s seaborne coal imports, mostly thermal coal.
• Power generation from coal rose 13 percent in 2024, compensating for the decrease in hydropower generation due to low water levels.

Regulations on coal import:

• Coal Blending Requirement: Since 2022, all power plants in India must blend a minimum ratio of imported coal, to maintain coal stockpiles and avoid blackouts.
• Current requirement: From June 27 to October 15, 2024 period, the blending ratio was lowered from 6% to 4%.

Coal Blending Ratio:

• The coal blending ratio refers to the required percentage of imported coal that must be mixed with domestic coal in power plants.
• The blending ratio influences the balance between domestic production and reliance on imports.

Why a slowdown is expected? 

• Monsoon rains: Coal demand and shipments to India are expected to reduce with an increase in hydropower generation as the monsoon rains have pushed up reservoir levels.
• Coal Inventories: Generally healthy across most power plants, with only 22 plants facing issues.