Indian Industries Stock Up On Coal To Avoid Shortages During Summer

Metals and paper industries in India are stockpiling coal to avoid shortages during the summer when heat waves are expected to drive consumption of the country's main power generation fuel.

Although supplies to non-power industries have improved in recent months, companies are still concerned about shipments dwindling when demand from power plants soars during the hot season, which begins in April. The fear of mine output disruptions when monsoon rains arrive a few months later is also a factor.

High demand periods put the country's coal infrastructure to the test, forcing the government to prioritise supplies to power plants in order to avoid blackouts, leaving other industries either without fuel or paying exorbitant prices for cargo. By increasing coal output, Prime Minister Narendra Modi's government hopes to protect users from such volatility.

“Given the government's efforts to deal with summer power demand, we're moving in an organised manner to deal with any shortages or price increases,” said Kusumakar Mishra, deputy general manager for raw materials at Kolkata-based Shyam Steel Manufacturing.

Mishra said that the manufacturer of the steel reinforcement bar, which is used in construction, recently purchased a cargo of Australian thermal coal that will last until June. It intends to purchase another shipment by the end of April in order to stockpile coal until September.

However, In the first 11 months of the fiscal year that ended in April, India's coal production increased by 15 per cent. Coal India, which accounts for nearly 80 per cent of output, announced this week that it is increasing supplies to power plants to meet rising demand.