India's coal imports fell to a seven-month low in September, primarily due to high domestic coal inventories, reduced electricity demand, and the increased share of renewable energy generation. This decline reflects ongoing pressure on the country's coal import needs.

The country imported 17.96 million tonnes of the fuel in September, falling 1.98% from 18.33 million tonnes in the same month last year and down 5.85% from 19.08 million tonnes in August, according to data from the Indian Ministry of Commerce and Industry.

Coal imports amounted to $1.87 billion in September, down 14.43% year on year (YoY) and 5.78% month on month (MoM). This put the average coal import price at $103.95/t, declining 12.71% YoY but ticking up 0.07% MoM.

India's ongoing reduction in coal imports can be attributed to high domestic production and inventory levels. Although coal output in September showed a slight drop, it remained at elevated levels, while domestic inventories continued to rise.

With demand growth slowing, India's reliance on imported coal weakened significantly.

The primary suppliers continued to deliver coal to India. Although shipments dipped on a monthly basis, they still increased compared to a year earlier, especially from Australia and Russia.

On the demand side, despite the seasonal slowdown in industrial power consumption and construction activities during the monsoon, some industries began to stockpile for the upcoming winter and festival season, leading to a modest recovery in imports.

September saw power consumption reach 145.91 TWh, marking a 3.21% year-on-year increase, although overall electricity demand growth slowed due to prolonged rainfall and lower power consumption for air-conditioning.

Month-end coal stocks at utilities reached 45.84 million tonnes, up 24.35% YoY and available for 15.2 days of consumption, higher than 12.7 days a year ago, data from the Central Electricity Authority (CEA) showed.

However, the monthly drop in coal imports was smaller than the previous months. The international thermal coal prices remained relatively weak in September, with coal from Russia and South Africa becoming more competitive. This attracted Indian buyers to restock. While petroleum coke prices lost its cost advantage due to increasing shipping costs, prompting cement manufacturers to purchase more thermal coal.

Over January-September, India imported 189 million tonnes of coal, 2.34% lower than the year-ago 193 million tonnes, contracting 0.04 percentage point compared with the first eight months.

The import was worth $20.29 billion, down 21.4% YoY. The average import price was calculated at $107.16/t in the first nine months, falling 19.52% YoY.

In breakdown by coal type, India imported 13.02 million tonnes of thermal coal in September, down 8.53% YoY and 4.32% MoM, accounting for 72.49% of the total coal imports.

Coking coal imports stood at 4.85 million tonnes, up 20.23% YoY but down 7.14% MoM, making up 27.02% of the total. The imports of anthracite were 88,000 tonnes, surging 63.97% YoY but slumping 63.88% MoM.

By origin, the top five sources in September were Indonesia, Australia, Russia, South Africa, and Singapore, accounting for a combined 86.23% of the total coal imports, marginally higher than 85.3% in August.

India imported the most coal from Indonesia at 7.33 million tonnes in September, down 18.42% YoY and 5.17% MoM. That accounted for 40.82% of India's total coal imports, against August's 40.53%. Coal imports from Australia amounted to 2.96 million tonnes, rising 31.33% YoY but falling 5.24% MoM, which grabbed a share of 16.5%.

The nation imported 2.2 million tonnes of coal from Russia in the same month, gaining 32.27% YoY but down 10.81% MoM, taking up 12.26% of total coal imports. The intakes from South Africa came in at 1.8 million tonnes, sliding 2.77% YoY but rising 9.76% MoM. Coal imports from Singapore stood at 1.19 million tonnes, jumping 40.19% YoY and 54.65% MoM.

Additionally, India imported 248,900 tonnes of coke in September, dropping 30.98% YoY and 9.1% MoM. The imports amounted to $51.95 million, down 54.22% YoY and 34.95% MoM. Over the first nine months, coke imports in India totaled 2.92 million tonnes, falling 19.48% YoY, with value down 33.2% to $790 million.

In October, with the monsoon season over and cooler temperatures setting in, India's industrial production and construction activities are expected to pick up, boosting energy demand.

This, coupled with restocking efforts for the upcoming Diwali festival and winter electricity demand peaks, will likely lead to a moderate rise in coal import demand. However, the continued high domestic coal inventories may limit the extent of this increase.