ntly in January this year amid high stockpiles at power plants and strong hydropower generation, medium to long-term outlook remains positive given India's reliance on imported coal, Macquarie Research said in a note Monday.
India's thermal coal imports for January stood at 8 million mt, which is the lowest monthly level seen since September 2012, driven by slow demand for imported coal amid destocking at power plants and strong growth in hydropower generation during the monsoons, the report said.
The Indian monsoons typically run from May to September.
Stock levels at power plants had reached record its peaks in August last year on improved domestic supply by Coal India Limited, as a result of which imports were hit.
Additionally, demand has been impacted by the weak Indian Rupee against the dollar, Macquarie said.
The cost of procuring Indonesian sub-bituminous coal -- excluding freight -- has jumped 9% on rupee terms since the start of 2013, though the price of coal in dollar terms over the same period has actually declined by more than 4%, the report said.
But for the medium to long-term, outlook remains positive, it said.
According to the report, utilities will start stocking up around March-May ahead of the monsoons which will see demand spike.
But buying volumes may not be much as power plants had entered 2014 with sufficient stocks as compared with the past few years, the report noted.
Reliance on coal by utilities will remain high in India and the output from Coal India is unlikely to pick up substantially, the report said, adding that India's imports will grow further in the coming years.
Production by Coal India in the 10 months to the end of January was up around 3.2% year on year, while offtake was up just 1.7%, said the report.
