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Many Indian power plants are running on critically low coal stocks which has caused, in some cases, power outages. Mine stocks offer some cushioning but relying on them alone is risky. Coal-fired power generation is expected to stay exceptionally high throughout this winter and into summer next year; and without more thermal coal imports inventory replenishment at power plants would drain mine stocks to very low levels heading into the 2027 monsoon. Historically, there have been huge drawdowns in mine stocks from pre-monsoon levels to October. As a result, we have revised up our short-term view of Indian imports.
Indian coal inventories have fallen to multi-year lows
Thermal coal inventories at Indian power plants fell to below 20 Mt in late October 2026, with 95 out of 191 plants at critical stock levels. ‘Critical’ is defined by the government as below 25% of normal stock levels of 12–17 days of consumption. Indian coal-fired power generation has increased at 7% CAGR over the last six years. At current consumption rates, the current stock levels are equivalent to only about one week of consumption.
Strong summer demand, a dry monsoon and soft domestic production have drained mine and power plant coal inventories throughout the year; and stock depletion at several power plants by October 2026 led to power outages in parts of central and western India. Coal dispatches from mines should improve in Q4 but logistical bottlenecks will keep pressuring Indian power plant stocks.
To limit the risk of outages, the government has extended Section 11 directions requiring import coal-based (ICB) power plants to run at full capacity until end-December 2026, after earlier directions expired in September. However, high seaborne thermal coal prices mean the Power Ministry has no plans to require domestic coal-based power plants to import coal for blending.DCBs usually only import thermal coal when these mandates are in effect, but they can import without them. Mine stocks are being depleted rapidly, as is typical between their pre-monsoon peak and October. We therefore expect imports to rise and maintain adequate supply-chain inventories ahead of the 2027 monsoon.
Mine inventories deplete and imports rise when power sector stocks fall to critically low levels
When Indian power plant stocks run critically low, the country has historically drawn down mine inventories and imported more coal to rebuild them:
- 2021: Indian power plant stocks fell to a perilous low of ~8 Mt in September. Mine stocks plummeted by ~66 Mt from March to October and fell a further ~10 Mt between September and December, as power plants rebuilt stocks by ~14 Mt. The government issued blending mandates at 4% imported coal, following power outages in October, leading to DCB imports.
- 2022: After power outages in early 2022, mine stocks fell by ~34 Mt from March to October and the government increased DCB blending mandates from 4% to 10%, lifting imports for blending. Blending mandates were then relaxed to 5% in August. Power plant inventories rose by ~7 Mt in Q4 due to DCB imports and improved domestic supplies.
- 2023: Power plant stocks fell to ~18 Mt in October and mine stocks drew down by ~30 Mt. Blending mandates in early September were increased from 4% to 6% as plant stocks fell below ~20 Mt. Power plant inventories rose by ~10 Mt in Q4, supported by record-high imports.
The 2026 mine stock drawdown is the largest yet in absolute terms. Mine stocks have fallen from ~148 Mt in March to ~77 Mt in October. However, unlike the period of 2022–2023, imports have not increased, averaging ~12 Mt/m over January–October 2026.
DCBs will import more coal with or without official mandates
In the October 2026 edition of the CRU Thermal Coal Market Outlook (if interested, request a demo here), we forecast Indian coal-fired power generation would grow ~7% y/y between November 2026 and May 2027; and domestic coal production would grow ~6% y/y. Imports were expected to be flat y/y over November–December 2026, but were then lifted 12% y/y (i.e. +8 Mt) to ~70 Mt over January–May 2027. We forecast Indian power plants would rebuild stocks by ~10 Mt in Q4, in line with past restocking patterns, and by a further ~10 Mt over January–May 2027 to above critical levels. As a result, our mine stock forecast fell below ~30 Mt by end-May 2027, driven by a lack of willingness on behalf of the Indian government to mandate imports for coal blending, given high seaborne prices. However, we recognise that entering the monsoon with less than 30 Mt of stocks at mines will leave a very tight buffer and is likely to be unsustainable.
Thus, while we previously assumed no imports for blending and zero DCB imports over November 2026 to May 2027 – because the Indian government has no current plans for blending mandates – now we assume DCBs will blend 5% imported coal over the period.
This will lead to higher Indian thermal coal imports. A level of 5% import blending has been assumed as past blending mandates have been at this level. In our view, these imports for blending will occur with or without a government mandate, as power plants will voluntarily blend imported coal to avoid critically low stock levels. Our coal-fired power generation, domestic production and plant restocking forecasts remain unchanged.
Blending at 5% would add around 7 Mt to imports in November–December 2026 and 20 Mt in January–May 2027. The resulting 27 Mt over seven months would be nearly four times the imports of total domestic coal-based plants (DCB) seen in 2025. With these extra imports, mine stocks will fall more slowly, by ~24 Mt to ~53 Mt until end-May 2027. Thus, higher imports for blending will protect the mine stock buffer and reduce the risk of stock-outs during the 2027 monsoon, when domestic output is seasonally weak.
The boost to Indian thermal coal imports is incorporated in our updated price forecast
An upward revision of ~27 Mt to imports over November 2026 to May 2027 adds ~5% to monthly global seaborne demand over the period, which will support international prices. Indian thermal coal imports for power generation are generally from Indonesia, so our FOB Kalimantan price forecast will be affected the most. Our November 2026 monthly thermal coal price forecast update, as part of the CRU Thermal Coal Market Outlook, incorporates our new Indian thermal coal import view.
If you would like to know more about how Indian developments affect thermal coal markets, contact us. We would be happy to have a discussion.
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