One sign that India has made a little progress to improve recent macroeconomic woes has been a small pick up in power generation. At 6.4%YoY, its still not particularly good, but is better than the ~4.5% rates seen this time last year.
While coal burn has also been stronger, this is now starting to get less support from IPPs which saw very strong growth through 2013.
While generation has grown at 25%YoY, the level of output from IPPs is not much higher than what we saw at the end of 2013.
To be sure, there isn't much in the form of additional coastal IPP capacity coming online from end 2013 levels. Growth for the year as a whole is really a function capacity coming on stream through last year.
This is important for imported coal demand, particularly at a time when seaborne supply remains strong.
At this stage it doesn't seem like there will be a rush from government-owned power generation either, which currently look comfortably stocked. Currently levels of inventory are on par with last year, which was also a period in which coal availability was pretty good.
It also appears that government-owned power plants are holding more imported stock than this time last year. This is not particularly large in the context of overall inventories, but still currently accounts for ~1 day on consumption.
Inventories in terms of days of use continued to jump through 2013 as hydro generation turned out to be pretty good, while the macro situation was poor. At this stage its hard to get a decent read on hydro generation.
So while Indian import demand is growing, the key point is that it is set to slow quite a bit. And that is important for prices, particularly when
seaborne supply is still strong and Chinese demand is soggy.
