Coal India's coal inventory stood at 66.58 million tonnes on 30 September. That was down from 130.28 million tonnes on 31 March, a reduction of 63.70 million tonnes or 49%, according to its H1 FY27 investor presentation1. The company mined 321 million tonnes in April to September but dispatched 384.20 million tonnes1. It supplied 63.20 million tonnes more than it produced, and the drawdown covered the difference1.
Its inventory was also 38% below the 107.16 million tonnes held on 30 September last year1.
The run-down accelerated in the September quarter, from 101.35 million tonnes at the end of June to 66.58 million tonnes, a fall of 34.77 million tonnes1. The presentation labels that quarterly drop 52%, but that figure does not match its own tonnages: the same numbers work out to 34% of the June-end level1. The 49% half-year figure does match its tonnages1. Buyers should use 34% as the quarterly number, and check which base any future percentage is measured from.
Critical stocks at power plants
Of 176 domestic coal-based plants, with about 207 GW of capacity, 85 had critical stocks on 25 October, meaning less than 25% of the normative requirement2. The count peaked at 91 on 21 October, the highest this year2. Stocks at these plants fell to 17.67 million tonnes from 18 million tonnes on 16 October, and from 35.13 million tonnes at the end of July2.
Ankit Jain of ICRA said coal stocks at power plants overall stood at around six days' requirement on 10 October. That is below the levels of the past three years and well under the normative 19 to 20 days2. Electricity demand grew 10.2% in the first half of FY27 and 23.4% in the first 10 days of October, he said2. Coal-fired generation rose 13.3% in September as hydropower fell 20%4.
Supply is not keeping up. Domestic coal production fell 3.2% year on year in the first five months of FY27, largely because Coal India mined less, while coal supply to the power sector rose 4%2. That is the same pattern as Coal India's own numbers: demand is being met by moving stock, not by digging more1, 2. A senior power ministry official said on 22 October that a record 2.6 million tonnes a day was going to power plants5.
Output fell unevenly across subsidiaries. Northern Coalfields produced 57.99 million tonnes, down 16%, and its offtake fell 9% to 61.81 million tonnes1. South Eastern Coalfields produced 72.67 million tonnes against 68.27 million tonnes a year earlier1.
Paper mills warn on coal costs
The Indian Paper Manufacturers Association wrote to the Prime Minister after coal costs rose more than 50% in two months, warning that some mills may stop production3. Energy is about 15% to 20% of papermaking cost3. The association asked for priority allocation to pulp and paper captive power plants, on par with thermal plants3. It also sought delivery of at least 75% of the coal covered by fuel supply agreements or linkages3.
"Assured coal supplies are essential for the continuity of paper production," said Pawan Agarwal, president of the association3.
The gap between Coal India's price list and what buyers pay is the part to watch. Coal India has not raised its notified prices, according to Adani Power chief executive S B Khyalia6. Yet paper mills report large cost increases3. Khyalia also said monsoon-related deterioration in coal quality raised the amount of coal needed per unit of electricity, and that this cost is not automatically passed on in tariffs6. Quality is one reason the effective cost rises even when the notified price does not.
Rail capacity is the other constraint. Coal India moved 257 million tonnes by rail and merry-go-round systems in the first half, against 123 million tonnes by road1. The paper industry specifically cited irregular rake availability3. Coal India spent ₹2,152 crore on mine infrastructure in the half, including railway sidings, coal handling plants and silos7.
The import hedge costs more than the freight saving
Seaborne coal is not cheap. The Newcastle benchmark traded around $150.70 a tonne on 29 October, up 38.38% from a year earlier and near a three-year high8. Coal costing roughly 80% less than LNG is pulling Asian and European buyers back to it ahead of winter8. Indonesia, the largest exporter, cut August shipments by 23% after tightening export rules8. Global seaborne coal loadings rose 1.1% to 976.0 million tonnes in January to September, so Indian buyers are competing for the same cargoes9.
The landed number is worse than the benchmark. Adani Power's landed imported coal cost rose about 50% year on year in the September quarter, and fuel cost rose 41.8% to ₹10,229 crore6. The rupee at 95.27 to the dollar, about 8% weaker than a year earlier, adds to every dollar cargo10.
Freight is the one line item moving the other way for coal-sized ships. The panamax index covers the 60,000 to 70,000 tonne vessels that usually carry coal. It fell 2.2% to 1,921 points on 29 October, its lowest since 14 April, on an oversupply of tonnage11. A 93,000-dwt ship was fixed from the US East Coast to India, basis delivery passing Gibraltar, at $31,00012. The larger capesize index rose 5.3% to 4,090 points, and the Baltic Dry Index stood at 2,712, a two-week high11.
What happens next
The power ministry official said supplies would normalise, citing the record daily deliveries5. ICRA's Jain said a sustained recovery in production and supply would be needed to rebuild adequate buffer stocks2. He added that a further fall in inventories could limit the sector's ability to meet a sharp surge in peak demand2.
In separate core-sector data, the coal index rose 10.7% in September, and ICRA chief economist Aditi Nayar said "the sequential uptick in coal was quite strong, amid low stocks at power plants"13. Coal India's capital spending rose 27% to ₹7,966 crore in the first half, 109% of its H1 target and over 48% of the ₹16,500 crore planned for the year7. It accounts for over 80% of domestic coal output7.