Central Coalfields Ltd (CCL) carried out another round of special spot auction which has been modified for promoting import substitution of coal, but similar to the previous term the sales fetched tepid response from the buyers.
The company had put on sale 2,630,900 t coal for auction on 15 Dec ’20, of which only 19% of the material accounting to 509,150 t was sold, as the buyers felt that the minimum bid quantity stipulated in the auction scheme was too high.
It is pertinent to note that a buyer has to bid a minimum of 25,000 t for coal offered via road sale, where as in case of rail mode, the least quantity for bidding is 50,000 t (equivalent to 12 rakes). Given the difficult market conditions, buyers preferred to stay on the sidelines.
The first round of this auction when the provision was first introduced in Oct ’20 had also witnessed dull response wherein out of 1,693,300 t coal being offered, 24% of the material was booked.
Key findings:
(a) Recent hike in notified price brought about rise in price realisation for coal sales. Quantity in latest auction was booked at an average bid price of INR 1849/t which was 14% higher than INR 1622/t recorded in previous term.
(b) Better demand was seen for the superior coal grades. Entire volume of W-IV grade of coking coal was lifted from the Charhi colliery. (Detailed source-wise results can be seen here).
Similarly, in case of non-coking coal, G8 grade from Saunda colliery fetched gain of INR 620 over the reserve price of coal, whereas rest of the lot was booked at the floor price.
On the other hand, reserve price for non-coking coal in lower tier (G11 and G12) was set at the notified price, contrary to the 10% upper cap envisaged for the remaining lot. However, apart from Magadh and Balumath, no bids were recorded for coal from other collieries which included bulk offerings for G12 grade.
(c) Often coal buyers are seen crying foul over the lack of development in coal washeries, but, no urgency was noticed for 538,650 t washed coal products offered which remain unsold in the auction.
Despite the subdued sales in special spot auction for coal importers, CCL has garnered premium of 24% over notified price, which is second-best among the various subsidiaries for total auction sales recorded in Apr-Nov ’20. Incidentally, with revival of demand, the company has fetched fiscal high premium of 55% in Nov ’20 itself.
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