Whalesbook
Coal offtake dips as power demand slumps
The power sector's share in pan-India coal offtake reached a more than two-year low in December 2025, accounting for just 77 percent of total dry fuel despatched. This represents a significant drop from the average of around 80 percent and marks the third consecutive monthly decline for the sector, which consumes over two-thirds of the nation's coal.
The lowest point recorded was 77 percent in December, a stark contrast to March 2025 when the power sector's share peaked at 83 percent. Overall, the country's coal despatch has fallen for the fourth month in a row, with total offtake in December standing at 90.17 million tonnes, a year-on-year decrease of over 2.50 percent. For the April-December 2025 period, cumulative offtake was 742 million tonnes, down 1.25 percent from the previous year.
Monsoon Delays, Flat Demand Growth cited
Analysts and officials attribute the downturn to a slump in power demand, largely influenced by early and prolonged monsoon rains that dampened consumption. This reduced requirement for coal, the primary fuel for power generation, has led to a downward revision in India's power demand growth forecast for Fiscal Year 2026. The full-year growth projection has been sharply cut to 1.5-2 percent from an earlier estimate of 4-4.5 percent.
Demand remained subdued even during the peak summer months of April-June 2025, as unseasonable rains cooled temperatures. The cumulative coal offtake by the power sector for April-December 2025 fell by 3.79 percent year-on-year to 588.61 million tonnes. Consequently, coal-based power generation registered a negative growth of 2.23 percent year-on-year in January 2025, although it saw a 5.13 percent month-on-month increase due to cold weather.
Power Exchange Prices Feel the Pinch
The reduced demand and increased supply liquidity from hydropower and wind energy have also impacted prices on power exchanges. The Indian Energy Exchange (IEX) reported substantial drops in its Day Ahead Market (DAM) and Real Time Market (RTM) segments during the second quarter of FY26. The Market Clearing Price (MCP) in the DAM segment declined by 13.2 percent year-on-year to ₹3.22 per unit in Q3 FY26, while the MCP in the RTM segment dropped by 11.6 percent annually to ₹3.26 per unit.
Coal production itself is expected to remain flat in 2025, settling at an estimated 1,089 million tonnes, according to the International Energy Agency. While public sector companies like Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) may see output declines, production from commercial and captive blocks is projected to increase. This follows an all-time high coal production of 1,082 million tonnes in 2024.