CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Coal crisis looming large in India, warns S&P Global arm

By Vinu Lal

12:16, 21 October 2021

Indian flag concept with green, white and orange stripes
Indian power plants could see further pressure during the festive season – Photo: Shutterstock

Indian power plants will see further pressure during the festive season if the ongoing coal shortage crisis is not sorted in the near term, said a new report today from S&P Global company Crisil Ltd. The rating agency estimates overall growth in power demand for the current fiscal at close to 7%.

“Over the next three months, given the criticality of the current coal crisis, average demand would be lower than in the past few months. While this may offer temporary respite, the real monitorable for power availability would be the March-May period when temperatures begin to soar. Therefore, a build-up in coal inventories before end-February is crucial,” the Crisil report reviewed by Capital.com said.

Supply chain issues, triggered by the sudden demands of economic recovery since July this year, and other logistics and production issues with state-owned Coal India, which provides 83% of local coal requirements, have led to a sudden shortage of coal across the country. A drop in coal imports due to elevated prices, which also resulted in large consumers accumulating more coal that led to further shortages, also did not help the situation.

Power crisis averted

“Regulated coal supplies to non-power sectors and allowing participation of captive miners amid an increase in production by the key supplier – Coal India – may help corporate India avoid what appeared to be a major power crisis in the making until recently, but the threat still looms when power demand picks up from here,” the Crisil report added.

AUD/USD

0.67 Price
+0.070% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00006

USD/JPY

139.48 Price
+0.400% 1D Chg, %
Long position overnight fee 0.0104%
Short position overnight fee -0.0186%
Overnight fee time 21:00 (UTC)
Spread 0.010

GBP/JPY

175.06 Price
+0.320% 1D Chg, %
Long position overnight fee 0.0085%
Short position overnight fee -0.0167%
Overnight fee time 21:00 (UTC)
Spread 0.030

GBP/USD

1.26 Price
-0.080% 1D Chg, %
Long position overnight fee -0.0061%
Short position overnight fee -0.0021%
Overnight fee time 21:00 (UTC)
Spread 0.00013

Crisil said fuel inventory levels are mostly critical in Bihar, followed by Karnataka, Maharashtra and Rajasthan. India’s daily electricity consumption has crossed 4 billion units resulting in a 18% rise in coal consumption during August-September when compared to 2019 levels.

Reduced coal stocks at power plants have also triggered worries about a possible electricity shortage. This is because coal-fuelled power projects with a total capacity of  202.22 gigawatts account for more than half of India’s power generation capacity.

“Coal stocks are unlikely to improve to the previous level of 15-18 days inventory anytime soon. Also, availability of rakes and a pick-up in power demand in March-May will be the key monitorables from here,” the report added.

Read more: India’s Asian Paints reports fall in profit on higher input costs

Related topics

Rate this article

Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 535.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading