Coal India Sales Outpace Production by Record to Ease Stockpiles

(Bloomberg) -- Coal India Ltd.'s sales outpaced production by a record last month as the world's biggest miner continued its efforts to reduce stockpiles.

Shipments in July rose 6.9 percent from the same month a year ago to 44.33 million metric tons, the ninth straight year-on-year gain, while production eased a fourth month, sliding 0.3 percent to 36.64 million, according to Bloomberg calculations based on an exchange filing by the company Tuesday. Sales surpassed output by 7.69 million tons, the widest margin on record.

"The destocking of the inventory may continue until at least the end of the monsoon season in September," said Goutam Chakraborty, an analyst at Emkay Global Financial Services. "Coal India is producing only as much as there is a demand for. So, we are unlikely to see a spurt in production until the demand improves considerably."

Power plants, Coal India's biggest customers, have bought less coal and tried to burn through their own inventories amid seasonally weaker power demand during the rainy season as construction, cement and steel companies slow activity. Production by the Kolkata-based miner also eases as heavy rains can flood mines.

Coal India held 49.9 million tons of inventory at its mines as of July 1, compared with 68.6 million tons about three months earlier, according to the federal coal ministry. The Kolkata-based miner plans to reduce inventories to below 40 million tons, Chairman Sutirtha Bhattacharya said in May.

Sales during the first four months of the fiscal year ending March 2018 have risen 4.1 percent, while output has dropped 4.3 percent, according to the company's filing.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net.

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Alpana Sarma, Abhay Singh