India Coal Shares Surge Nearly 5% on Summer Power Demand Spike

Shares of Coal India Ltd (CIL) have seen a significant rise this week, driven by expectations of a surge in power demand during the summer months. Despite a slight dip on Friday to ₹462.30, down from the previous trading day's close of ₹470.10, the world's largest coal producer's stock has gained nearly 5% cumulatively over the past five trading days.

India is the world's second-largest coal producer and consumer, relying on imports for approximately 15% of its consumption. An adequate coal supply is crucial, as coal-fired power plants account for 70% to 87% of the country's total electricity generation, even as the nation strives to increase its renewable energy capacity. CIL, which supplies over 80% of India's domestic coal, saw its shares rise this week as India braces for higher temperatures.

The government anticipates increased electricity demand due to the onset of summer and potential increased use of electric cookers and battery-powered infrastructure amid tighter natural gas supplies. Although the government has mandated priority access to LPG supplies for households, concerns about potential cooking gas shortages have arisen due to the war in West Asia between Iran and US allies. The coal ministry has stated that the country's total coal stock of 210 million tonnes is sufficient for approximately 88 days of use. The ministry has also assured consumers that the country is well-prepared for a surge in coal demand, noting that consumption is projected to be lower than production and supply in fiscal year 2025-2026.