New Delhi [India], March 31 : Thermal coal in India is once again relatively cheap, making it an attractive input for electricity generation from a price perspective for thermal plants, as per a report by BofA Securities.
Consistent with the robust economic growth in India, the country's coal-fired power generation is rising, outpacing all other sources of energy, the global financial services firm said.
Coal production volumes in India have also been quite strong, limiting the need for Indian power generators to buy from overseas markets. The relatively lower need for imports has provided little support to seaborne coal prices, BofA Securities said.
Data indicates that India's coal-fired power generation was very strong last year 2024, and recent investments in power plants suggest that coal consumption will likely hit a record in 2025 again.
"Beyond India and taking the baton from China, other developing economies, such as Vietnam, have emerged in recent years as robust thermal coal importers, a trend that will likely continue for the next 18 months," it said.
Further, the BofA Securities noted that there are some common themes between India and China, which are depressing near-dated thermal coal prices.
While the medium-term demand story is positive, the report noted that Indian coal stocks at power plants are very high as well, with more than 90 per cent coming from domestic producers.
"However, we also see robust capacity under construction in India in coastal areas, hinting at potentially strong seaborne demand for coal in the next two years," said the report.
Overall, global coal prices have collapsed since late November on rising thermal coal inventories in China.
Heading into shoulder season, BofA sees further downside risks to prices in the near term. In China, heightened competition from renewables is displacing coal and curbing the need for imports.
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