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Coal is the new Gold today. Various factors are contributing to soaring coal prices up.

Coal is the new Gold today. Emerging among the top gainers on the benchmark indices was led by Coal India trading at Rs 185.40, which touched a high of Rs 197, registering a gain of 6.5 per cent on Wednesday, September 29, 2021.

On the global front, Coal prices soared to a fresh record high of USD 208/metric ton registering a monthly gain of nearly 31.22 per cent and yearly gain of almost 145 per cent. Various factors are contributing to soaring coal prices up. On the demand side economies world over are opening up as they emerge from the shocks of the pandemic. This increased demand is met by bottlenecks in supply as China bears the brunt of the import ban from Australia. This rebound in demand is fast outpacing the supply.

On the domestic front, our fleet of coal plants are drying up their inventories fast. The increased electricity demand, infrastructure bottlenecks, and a surge in gas prices have pushed pressure on coal-fired plants.

Coal India Ltd (CIL) produces around 83 per cent of India’s overall coal production in India where approximately 57 per cent of primary commercial energy is coal-dependent, CIL alone meets the tune of 40 per cent of primary commercial energy requirement.

The trend was also evident in the stock rally in NTPC Ltd which was up by 6.4 per cent, trading at Rs 140.40. In a press release, NTPC has confirmed to have bagged 1.9 GW solar project in CPSU Scheme- II tender. Also, in a bid to promote green energy, Coal India subsidiary Northern Coalfields Ltd have collaborated with NTPC to install a 50 MW solar power project in Madhya Pradesh.

In light of these unprecedented situations, the price of coal is expected to be high in the near term. In our opinion, coal mining stocks would be worth watching out for.