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The National Coal Index (NCI) increased significantly in September of this year, the first gain since April 2023, according to current developments. This spike in the NCI has important ramifications for India’s coal industry and is connected to variations in the price of coal globally.
Understanding the National Coal Index (NCI)
What’s that? The NCI is a price index that shows how the price of coal changed from a defined base year to a specific month.
Release: The Ministry of Coal releases it once a month.
Launch: On June 4, 2020, the NCI was unveiled as a tool to track changes in coal prices in relation to a set base year, FY 2017–18.
Price Indicator: One important price indicator that integrates coal prices from several sources, such as import prices, auction prices, and notified prices, is the NCI.
Basis for Premiums: Using a market-based approach, it is essential in setting premium rates, which can be done either on a per-tonne or revenue-sharing basis.
Components of NCI
Sub-Indices: There are five sub-indices in the NCI, with three pertaining to non-coking coal and two to coking coal. The final index for non-coking and coking coal is derived by combining these sub-indices, which clearly distinguishes the two types of coal.
Customized Revenue Shares: The revenue share is determined by using the relevant sub-index, which is based on the coal grade connected with a mining.
Factors behind the NCI Surge
Impact of Global Prices: The recent increase in the NCI is mostly due to a brief increase in the price of coal globally, which has had an impact on the Indian coal market.
Seasonal Demand: As India’s winter and holiday seasons get near, there is an increased demand for coal, which has forced producers to increase domestic output in order to keep up with the country’s expanding energy requirements.
Growth in the Power Sector: As a result of rising electricity demands, India has seen a spike in the demand for coal, especially from the power sector.
Continued Coal Imports: In accordance with the electricity ministry’s coal blending directive, power plants have kept importing coal.
