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Now coal demand expected to rise in festive season, say Ind-Ra
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SME Times News Bureau | 21 Oct, 2020
Coal demand is expected to pick up on a year-on-year basis as the
end-user industries ramp-up capacity utilisations during the festive
season, said India Ratings and Research (Ind-Ra) on Wednesday.
The
ratings agency cited that coal demand is expected to rise as the
end-user industries ramp-up their capacity utilisations to cater to
improved demand for their products, gradually overcoming Covid-19 led
disruptions.
"Coal supply is also expected to improve YoY, given
the easing of mobility restrictions, receding inventory levels at power
stations and the government's continued focus on reducing coal imports,
by entering into definitive agreements with end-users to substitute
imported coal with domestic coal," the ratings agency said in a release.
"The
green shoots of demand in the economy indicate a recovery path ahead.
Supported by a 4 per cent YoY recovery in domestic power demand for the
first time after six consecutive months of a lower yoy demand, coal
offtake recovered strongly by 26.6 per cent YoY to 50.1MT in September
2020, higher 6.3 per cent month on month (mom)."
"The increased demand was also partially fed by inventory at power stations."
Accordingly,
domestic coal production bounced back sharply in September 2020 to
43.9MT, higher 25.3 per cent YoY and 10.7 per cent MoM, despite the
monsoon season.
"Such recovery has been seen after subdued
production for the four consecutive months over April-July 2020,
followed by a marginal 1.8 per cent YoY recovery in August 2020," the
statement said.
"Domestic coal imports are likely to have been
lower in September 2020 YoY, due to the consistent push from the
government of India to reduce coal imports, especially non-coking coal,
which can be substituted partially by domestic coal."
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