Coal India Ltd. ‘s shipments hit a four-year low in the year to March after pandemic demand for the commodity.
The state-owned mining corporation sold 573. 8 million tonnes of coal in the period, down 1. 3% from a year earlier, according to a statement on Thursday. This reflects a decline in consumption, as lockdowns have paralyzed commercial activity. Power plant inventories then increased. , which weighs on Coal India’s sales.
With the company’s own inventories also at unsustainable levels, production fell as did shipments, falling 1% to a three-year low of 596. 2 million tonnes. The company has amassed a record volume of 99 million tonnes of fuel at its mines, it said in a separate statement.
To help sales, Coal India introduced incentives to attract customers, especially those who regularly imported the material. This replaced 90 million tonnes of imports a year, the Kolkata-based miner said.
There are signs that inventories are starting to be absorbed: Coal India’s shipments in March were up 12% from a year earlier, while production fell 3. 8%.
The situation could get worse as summer approaches in India. An increase in the consumption of electrical energy for refrigeration may force plants to fill shrinking inventories, contributing to Coal India’s sales growth, according to Elara Capital India Pvt. Ltd. Vice President Rupesh Sankhe.
“We expect a smart expansion of sales volume this year due to last year’s weak base, as well as a recovery in commercial demand,” Sankhe said. “Immediate attention deserves to be on inventory liquidation, which could limit production expansion in the coming months. “
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