India's electricity demand is expected to fall for the first time in four decades in the ongoing fiscal year, which ends in March 2021.
Imports by utilities, which account for over three-fourths of India's coal use, fell 41%, the government data showed, as coal's share in overall power generation dropped to as low as 60% during the quarter, compared with 2019 average of nearly 70%.
Thermal coal imports by the "non-regulated" sector, which includes cement producers and the metals industry fell 41.7%, the coal ministry data showed.
Lower coal imports is good news for the Indian government, which has been looking to cut down imports of the fuel.
But fewer shipments by India - the world's second largest consumer, importer and producer of the fuel - will hit miners such as Indonesia's Adaro Energy and traders such as India's Adani Enterprises and London-listed Glencore Plc.
Imports of coking coal - used mainly by the steel industry - also fell 28.6% to 9.71 million tonnes, government data showed.
Coal-fired electricity showed signs of recovery during the first half of September, driven by higher demand in India's industrial western states. Still, coal imports will likely not grow year-over year in the near-term, traders say.
India's thermal coal imports fell nearly 20% in the eight months ended August, data compiled by Iman Resources - which mainly trades U.S. origin coal - showed.
Vasudev Pamnani, senior trader at Iman, said he doesn't expect coal imports to grow year-over year till late 2021.
"Import of coal from the United States, Canada and Columbia will be likely hit in the near-term as they will be less competitive," Pamnani said.
By Sudarshan Varadhan