India's thermal coal imports are poised for a strong rebound in October 2026 as coal-fired generation hits record highs and industrial coal and power demand picks up after the rainy season.

Ship-tracking data from Kpler showed India's thermal coal imports so far in October 2026 have already surpassed September levels at nearly 12 million tonnes, with forecast data pointing to imports of close to 14.4 million tonnes for the month, the highest since July 2025.

Power plant inventories remain low even as electricity demand hits new highs, with the number of plants at critical stock levels still rising. Coal stocks at Indian power plants stood at 19.93 million tonnes as of October 25, down 2.5% from the previous week, according to Central Electricity Authority (CEA) data. A total of 95 plants were at critical low inventory levels that day, two more than a week earlier.

Coal consumption by India's power sector has surged as the rainy season ends and temperatures rise. Coal-fired generation reached 86.27 TWh during October 1-22, up 27.6% year on year, CEA data showed.

Plants designed to run on imported coal have a combined capacity of about 17.8 GW, accounting for 8% of India's total coal-fired capacity. With weak demand for imported coal at blending plants, reliance on stockpiled coal has increased and consumption has climbed rapidly, making it difficult for these plants to build adequate inventories.

Hydropower output has also weakened after the rainy season and is below year-earlier levels, reinforcing the power sector's reliance on coal. Drought linked to the El Nino phenomenon cut hydropower output by 16% year on year, while wind generation also fell on seasonal weakness, forcing India's grid to lean heavily on thermal power.

Coal-fired generation already posted a 15% year-on-year increase in September 2026, and coal's share of generation has approached 70% since the start of October. Looking ahead, coal-fired output is expected to rise further as solar generation declines, wind continues to weaken and gas-fired generation falls, particularly in meeting nighttime demand.

On the non-power side, end users are restocking after the rainy season ahead of holiday and winter demand peaks. Indonesian cement producers are seeking coal as feedstock amid rising petroleum coke prices, while sponge iron producers are showing greater interest in high-CV South African coal.

On supply, coal dispatches to India's power sector have grown slowly this year, lagging generation growth due to sluggish output growth and rain-related disruptions to rail coal logistics, leading to a drawdown in utility inventories.

Authorities are working more closely with coal producers and the railway sector to accelerate coal evacuation from mines. Coal India Ltd held 67 million tonnes of coal stocks at the end of September 2026, with its output and dispatches recovering in tandem.

Traders had said domestic coal supply is expected to improve in the fourth quarter, typically a period of higher Indian coal output. However, with demand expectations also strong, it remains uncertain whether domestic supply growth can meet demand, and India's reliance on imported coal is likely to increase in the coming months, with import demand expected to remain stable.