India industries must keep importing pricey coal, secretary says

Indian industries, including steel and aluminum makers, will need to continue importing expensive coal shipments to meet their requirement, as the cheaper, domestically produced fuel will be prioritized to power generators, according to the top bureaucrat in the coal ministry.

While Coal India Ltd. will ensure that supplies to the non-power sector don’t decline, any deficit must be bridged by overseas shipments, Coal Secretary Anil Kumar Jain said in a phone interview. The miner will fulfill demand from power producers, and only the remaining supplies will go to other industries, he said.

Benchmark Asian coal spot prices recently surged to a record as buyers across the region scrambled to find alternatives to Russian supply, further tightening the fuel’s availability. Meanwhile, India’s domestically produced coal is sold at a deep discount to overseas rates, with prices controlled by the nation’s top miner.

Coal India is pushing more supplies to power producers to avoid a repeat of last year’s shortage, prioritizing citizens over industries in order to deliver affordable energy.

Industries have started complaining of supply shortfalls and are forced to import fuel from overseas. Coal reserves at power plants used by aluminum producers are at an average of three to four days, down from a typical level of 15 days, according to the Aluminium Association of India.

Smaller steel producers in India are finding it difficult to contract future coal supplies due to a surge in seaborne rates, according to Lalit Beriwala, director at Shyam Steel Industries Ltd, a Kolkata-based TMT and rebar producer. Coal stocks at Shyam Steel are drying up and the company has 15 days of inventories, down significantly from a typical 3 months of supply.

A higher dependence on coal imports threatens to crimp industries and resonate through the economy that’s already weighed down by surging crude oil and natural gas prices.