Divya Delhi:  Arch predicts a significant fall in coal output in June as demand remains muted across numerous regions during the pre-monsoon season. The research noted that Coal India Ltd. (CIL), India's largest coal producer, started FY26 weakly with April-May 2025 sales volumes down 4.7%. Volume growth lacking; long-term growth at risk COAL started FY26 with Apr-May '25 sales down 4.7% YoY. We expect volume drop in Jun-25.”


The Ministry of Coal reported that power demand declined 1.6% YoY in April-May 2025, affecting coal demand across various regions. Rising captive and commercial coal mining volumes have further eroded Coal India's market dominance. Captive and other producers supplied 20% of demand in April-May 2025, up 14.5% YoY to roughly 35 million tonnes (mt). Captive and other mines consumed 197 mt of coal in FY25, up 31% YoY. The max rated capacity of captive mines allotted or auctioned so far is 575 mtpa, raising long-term volume growth worries for Coal India.



The study has lowered its Coal India sales volume predictions by 2% for FY26E and FY27E to 770 mt and 793 mt, respectively. This yields 2% volume CAGR over FY25-27E. Due to heavy inventory, Coal India's manufacturing capability is also limited. The company had 112 mt of coal at the end of May 2025, up from 82 mt in 2024. Inventory averaged 83 mt from FY20 to FY25. Such large supply levels should restrict major output increases. Due to several variables, Coal India's cost of production (CoP) may rise. Stripping ratio, a major expense driver, is predicted to climb to 2.67x in FY26 from 2.58x in FY25. Without volume increase to leverage manufacturing, this would raise costs.