Coal index posts steep fall, indicates sufficient stock of fuel

India's coal industry affirms a substantial stockpile, with coal companies holding impressive stock. This availability ensures a stable supply for various sectors dependent on coal, the release said.

The National Coal Index (NCI) recorded a steep decline of 33.8 percent to 157.7 points in May 2023 from 238.3 points a year back,  the coal ministry said in a statement on July 26.

A fall in the NCI indicates a strong supply of coal in the market with sufficient availability to meet the growing demands.

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What is the NCI? 

The National Coal Index (NCI) combines coal prices from all sales channels, including notified prices, auction prices and import prices.

The NCI for non-coking coal suffered a decline of 34.3 percent compared to May 2022 and it stood at 147.5 points in May 2023. Non-coking coal is mainly used in thermal plants for power generation due to its inherent lack of caking properties. The NCI for coking coal reached 187.1 points in May 2023, posting a decline of 32.6 percent.

The index peaked in June 2023 reaching 238.8 points.

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What the decline means? 

Premium on auctions of coal indicates the state of the coal market and reflects its availability or scarcity. A decline in the premiums indicates that sufficient coal is available in the market.

The Indian coal industry affirms a substantial stockpile, with companies holding impressive stock. This availability ensures a stable supply for various sectors dependent on coal, the release said.

The trend witnessed in the NCI shows that a more balanced market is prevailing at the moment in which supply and demand are aligned.

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Sufficient availability of coal is a pre-requisite for smooth functioning of the economy as multiple sectors are dependent on the availability of the fossil fuel.

The Ministry of Coal had on July 18 said in a release that there's an ample availability of coal for the Thermal Power Plants (TPPs) across the nation. "As on July 16, thermal power plant end coal stock stands at 33.46 million tonnes (MT), which is 28 percent higher compared to the corresponding period of last financial year. Coal availability at all locations including pithead coal stock at mine end, stock in transit and TPPs is 103 MT as against 76.85 MT last year, which is 34 percent higher," it said.