According to a report by BofA Securities, thermal coal in India has become relatively inexpensive again, making it an attractive option for electricity generation from a cost perspective for thermal power plants. The report highlights that coal-fired power generation in India is increasing, keeping pace with the country’s strong economic growth and surpassing other energy sources.
India’s coal production has been robust, reducing the need for power generators to rely on imports. This limited demand for overseas coal has had little impact on seaborne coal prices, the report notes. Data shows that India’s coal-fired power generation was strong in 2024, and recent investments in power plants suggest that coal consumption is expected to reach record levels in 2025.
The report also mentions that, beyond India, other developing economies like Vietnam have emerged as significant thermal coal importers, a trend expected to continue over the next 18 months. BofA Securities observed similar factors in both India and China that are putting downward pressure on near-term thermal coal prices.
While the medium-term outlook for demand is positive, the report also points out that coal stocks at Indian power plants are very high, with over 90% of the coal sourced domestically. However, the report suggests that ongoing investments in coal capacity, particularly in coastal areas, may lead to increased seaborne coal demand over the next two years.
On a global scale, coal prices have dropped significantly since late November, partly due to rising thermal coal inventories in China. As the industry enters the shoulder season, BofA Securities anticipates further downside risks to coal prices in the short term. Additionally, increased competition from renewable energy sources in China is reducing the demand for coal imports.
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