Gradual revival in power demand seems to have little impact on improving the domestic coal sales, as recent special forward auction turned out to be a dull affair for Mahanadi Coalfields Ltd (MCL).
The company had offered a massive 1,980,000 t coal for power producers in the auction held on 8 Oct ’20, wherein only one-third of the material accounting to 6,512,000 t was booked, garnering nil premium over the notified price.
However, due to the bulk volume being sold which incidentally was almost similar to the quantity put on sale in the previous term, a slight uptick was recorded in terms of price realization. The coal was sold at an average price of INR 766.31/t, which grew 3% from INR 742.78/t noted in the auction held on Jul ’20.
Coal prices from Indonesia, despite significantly fallen due to the pandemic are still assessed higher than the lower coal grades being offered in the auction. But, better quality assurance over domestic coal has assisted the imported grade to regain adequate market share among power producers.
As per the data maintained by CoalMint Research, imports of non-coking coal from Indonesia was marked at 8.21 mn t in Sep ’20, which had fallen to the levels of 4 mn t during May-Jun period.
Source-wise coal allocation:
Better demand was seen for G14 and G15 coal grades comparable to the superior grades, notably entire volume of G13 coal went unsold in the auction. (Detailed source-wise results can be seen here).
Out of 19 lots from which coal was put on sale, only four had witnessed lifting of entire coal volume being offered, namely- Lingraj OCP, Kaniha, Kulda and Garjanbahal.
Despite the subdued sales, the auction proved to be effective way for disposing the surplus inventory. Adding to that, MCL has informed the power sector consumers to procure their share of un-booked quantity for FY ’21, provided that the coal would be utilized for supplying electricity to DISCOMs under long-term PPAs.
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