India’s coal market is showing signs of lagging demand and imports, with recent flow data indicating the early stages of a potential turnaround. After several months of relatively weak seaborne volumes, import flows appear to have strengthened through March 2026, suggesting that the period of weak buying may be ending and buffer stocks could begin to be drawn down.
The underlying demand pressure is increasingly evident. Monsoon heat is leading to an early rise in electricity consumption, while turmoil in global gas markets linked to rising geopolitical tensions in the Middle East has restricted the availability and affordability of imported LNG. As a result, coal-fired power generation is accounting for a larger share of the energy mix.
This shift is reflected in futures demand indicators. Coal consumption at domestic coal-fired power plants is expected to rise by about 11.5% year-on-year to nearly 233 million tons in the April-June 2026 quarter, according to industry and government forecasts. Meanwhile, strong summer conditions are expected to push peak power demand to around 270 GW, reinforcing the need for reliable baseload generation.
Despite this strong demand backdrop, the seaborne response has remained relatively weak so far. One of the main reasons is the size of the inventory buffer accumulated over the past year. India currently has nearly 220 million tonnes of coal stock across mines, power plants and supply chain, providing about 24 days of consumption cover, according to recent government data. This represents a historically high level of inventory and has allowed buyers to postpone imports even as demand begins to rise.
At the production level, local supply remains strong but has shown signs of adaptation. Coal India reported March 2026 production of about 84.5 million tonnes, down about 1.5% year-on-year, reflecting a moderation in production amid high inventory levels. High initial stocks and strong domestic availability also contributed to the policy push to reduce reliance on imports earlier in the year. Together, these dynamics help explain the gap between rising demand and a recovery in seaborne flows. While consumption increases, existing inventory continues to protect the system, delaying the need for immediate large-scale restocking.
Looking ahead, with demand rising in the peak summer months, gas-fired generation facing constraints, and temperatures expected to remain higher than normal, coal-fired plants will need a sustainable supply of fuel. Although current inventory levels are high, they are being drawn in the face of a much stronger demand environment than when they were assembled. As stocks gradually normalize from high levels, India is likely to re-engage more actively in the seaborne market. The recent strengthening in import flows may represent an early indicator of this shift, although a full restocking cycle is not yet visible in the data.
Freight market overview
The Baltic Dry Index is back above 2,000 points, with Capesize and Panamax gains, especially in the Atlantic Basin.
Atlantic shipping
Cap size C3 / Panamax P7
- C3 | Tubarao to Qingdao | $30.11/metric ton | Today: -0.41 | Week: -0.05 | Downward Momentum: Prices fall daily and are flat throughout the week
- p. 7 | American Gulf to Qingdao Grain | $68.76/metric ton | Today: +0.09 | Week: +0.08 | Bullish momentum
Supramax S4A/Manual Size HS4_38 Weaker
- S4A | American Gulf Cruise to Scao Passero | $19,879/day | Today: +950 | Week: +1,962 | Strong daily and weekly gains suggest a short-term recovery, but the heavy monthly decline of -6,771 reveals that S4A is still recovering from a significant pullback.
- HS4_38 | American Gulf cruise through the American Gulf or the northern coast of South America | $11,664/day | Today: -157 | Week: -1,403 | Strongly bearish sentiment.
Pacific shipping
Head Size | C5 is softer
C5 Western Australia – Qingdao
- C5 | Western Australia to Qingdao | $11.93/metric ton | Today: -0.23 | Week: +0.29 | A mixed picture, the daily decline is a slight pullback versus a positive week.
Short-term bullish momentum
- P. 5_82 | South China, Indonesia Round Trip | $15,478/day | Today: +359 | Week: +800
- S10 | South China Journey via Indonesia to South China | $13,200/day | Today: +612 | Week: +1,334
Ballasts overview
A bullish sentiment emerged in prices this week, especially when comparing the dry market outlook with the performance of the C3 index.
- South Atlantic holds at 242, down 7% F but still below the 12m average of 260, width still relatively tight.
- Congestion in China fell by 18% year-on-year to 112 versus 133 on average, resulting in ships being cleared faster, adding to the load pressure in the near term.
Request| Ton Mile – 7D MA- View Index
Panamax remains the strongest sector, maintaining a ratio above 100% for the second week in a row. Supramax stock saw the biggest weekly decline, while Capesize stock fell marginally. Overall usage declines as we approach mid-April.
Metric Description: Displays the index (base 100) by total mileage during the selected period.
This facilitates comparisons of relative performance between sectors of different sizes (for example, comparing Supramax versus Capesize growth rate).
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Source: Written by Maria Berzelito, Signal Group https://www.thesignalgroup.com/weekly-market-monitor/spotlight-indian-coal-flows-indias-coal-demand-is-rising
