Rise in price of imported coal
A 60 per cent rise in prices of imported coal in the April-October 2016 period is likely to dampen coal imports and negatively impact railway freight revenue as end-user industries could shift to domestic coal, according to India Ratings and Research.
1. With the rise in prices of imported coal, these end-user industries are looking at alternative fuel sources, which could pressurise imported coal volumes.
2. In a scenario of power surplus with adequate domestic coal availability, the use of imported coal for the power generation purpose is likely to remain gentle.
Coal India saw a 10 per cent increase in its output in FY16. The higher input costs will not affect the power generators due to their ability to pass through the costs.