Producers are only meeting 60% to 65% of annual demand.
Coal demand continued to outstrip domestic supply in India for the month of September, as power demand increased further in the country.
Care Ratings, in its report, said power consumption for the period August 2021 and September 2021 increased from 106.6 BU per month in 2019 (pre-COVID year) to 124.2 BU per month in 2021.
Meanwhile, coal production in the country's biggest companies, Coal India Ltd. (CIL) and Singareni Collieries Company Limited (SCCL), both decline in September, at around 4% and 10%, respectively.
The analysts said the decline in coal production was due to sharp increase in international coal prices and freight rates, and the emergence of of the monsoon season.
"Since domestic coal producers meet just about 60% to 65% of the country’s total annual coal demand, this has led to a high import dependence and the demand far outstripping the domestic supply," Care Ratings said.
Coal production, however, will likely pickup after the monsoon season recedes.
In other Asian countries, coal stockpiles are also hitting low levels.
In China, production has hit "critical low levels," while demand is "at all-time high."
Globally, domestic demand for coal from power sector picked up from August 2021 onwards as pandemic restrictions eased further in many countries.
To meet the the annual target fro coal production, domestic coal producers including CIL and SCCL
"will have to significantly ramp up the production from October 2021."