The domestic coal market is witnessing rising demand and price pressure as the West Asia crisis is triggering an energy crisis, while the power sector remains steady on the back of coal and renewables, mjunction services said on Thursday.
According to mjunction services, a B2B e-commerce platform and joint venture between Tata Steel and Steel Authority of India, coal auctions are signalling early signs of rising demand and price pressure, but within a phase of controlled tightening rather than a sharp surge.
"Early indicators of tightening demand-supply dynamics and firming prices are visible in India's coal auction market, though the trend is gradual rather than broad-based," mjunction MD Vinaya Varma told PTI.
2 March 2026
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In February, premiums hovered around 35% over notified prices, suggesting that buyers are willing to pay a significant premium to secure supply -- typically a sign of tight spot availability and immediate demand pressures.
This pressure is being driven by a combination of factors like substitution from gas to coal amid LNG disruptions, seasonal demand build-up as power plants prepare for summer, and constraints on imports leading to greater reliance on domestic coal.
Around 47% of auction volumes have been absorbed so far this year, and current premiums remain well below historical peaks. This suggests that while demand is strengthening, it remains measured.
India is currently experiencing the ripple effects of geopolitical tensions in West Asia, with energy stress most visible in industrial clusters facing fuel shortages and disruptions in CNG and LPG supplies.
Despite ongoing efforts to diversify energy sources, the country's dependence on imported crude oil, natural gas, and LPG continues to expose it to external shocks.
That said, the power sector remains relatively resilient. Strategic policy choices over the years have reduced reliance on gas, with coal and renewable energy forming a more stable backbone.
Coal, in particular, plays a critical role in safeguarding energy security in the current environment. However, its ability to replace natural gas beyond the power sector remains limited in the near to medium term.
While coal has successfully substituted gas in electricity generation, its wider adoption as an industrial feedstock -- such as in fertilizers and chemicals -- will take longer to materialise, he said.
