Coal India's May sales driven sharply lower by slump in power demand

By Sudarshan Varadhan

CHENNAI (Reuters) - Coal India's sales fell 23.3% in May as utilities refrained from purchases amid record stockpiles and tepid demand because of a nationwide lockdown to curb the spread of the coronavirus.

Offtake by customers, such as power generators, fell to 39.95 million tonnes in May, down 23.3% year on year, though that represented a slight improvement from the 25.5% fall in April. May production fell 11.3% to 41.43 million tonnes, compared with a 10.9% fall the previous month.

More than three quarters of the electricity generated in India is derived from coal, with Coal India - the world's largest coal miner - accounting for more than four fifths of India's domestic production.

Power generation fell 14.3% in May and demand for the current financial year is expected to fall for the first time in at least 36 years.

India has also ramped up electricity generation from non-fossil fuel sources at the expense of coal-fired generation over the past two months, further dampening coal demand.

State-run Coal India and the federal coal ministry have been pushing electricity generators to keep buying coal even though utilities' stocks and miners' inventories are at record highs.

(Reporting by Sudarshan Varadhan; Editing by David Goodman)