For the last decade, China has certainly been the front runner ahead of India in terms of growth in general economic activity and more specific sectors like power and coal. This year India may only be on par with China in terms of GDP, but looks set to record much stronger growth rates in coal consumption. While this isn't enough to save coal this year, it does perhaps support improvement in future years.
Coal burn in India is running at 9.6%YoY YTD, but its in the private sector where generation growth has been explosive at over 40%. New big plants from Tata and Adani are recording stronger than expected growth despite these units making a loss under current arrangements, although it seems that the government is likely to back down and allow tariff rate increases. (See
this FT article). This is good news for importers given these plants were built with foreign coal in mind.
China, however, has been lacklustre, with slow power generation growth and continued strength in hydro generation affecting the coal burn.
The pick up in power generation in April has seen thermal increase, although gains have been tempered by the 20%YoY+ gains in hydro.
This in contributing to a weak domestic and subsequently seaborne thermal coal market, with India unable to create enough price tension to offset China weakness.
But it does help mitigate the size of the surplus in seaborne coal markets this year, with growth in Indian demand for imports perhaps supporting higher prices in a couple of years time if supply growth is rationalised.
