India: CIL’s coal allocation in auctions drops by 17% m-o-m in Apr ’21

Coal India Ltd (CIL) has maintained a watchful approach for coal sales via auction route in line with the hefty fall in price realization despite recording a better allocation against the offered volume.

Auction sales decreased 17% m-o-m to 15.14 mn t in Apr ’21 where the offered quantity was nearly reduced to half assessed at 27.52 mn t compared with the previous month.

In the previous fiscal, wherein record sales were reported via auction, focus was turned to elevate coal offering in order to liquidate the surplus inventory. During Apr ’20, the company had put up 41.37 mn t for sale of which 9.11 mn t was booked.

However, lesser price realization for coal sales has limited coal offering in auctions at a time when excess inventory has again re-surfaced as a major challenge for the company going forward.

Coal was booked at an average price of INR 1444.59/t in Apr ’21 which has been on a declining trend consistent with the continual fall in premium fetched for the sales. Notably, gain over notified price for the booked volume fell down to a 6-month low of 14% during the month.

Scheme wise auction summary

Indicating increased appetite from non-power consumers, coal booking under exclusive auction for this sector witnessed a growth of 89% m-o-m to 10.35 mn t in Apr ’21, thus contributing highest share in the total sales volume.

It is important to note that while coal volume put up for sale across the remaining auction windows was reduced, quantity offered for exclusive auction increased 63% m-o-m during the month.

Also, marking an improvement, special spot for coal importers had recorded allocation for the first time in past three months as coal in the previous round of auctions was left unsold.

Quantity in mn t

Going forward, CIL is expected to cater more of the coal requirement of power sector by means of FSA commitments especially in view of the steady fall in inventory levels at the power houses. Supplies via e-auction are likely to improve gradually once the coal consumers begin raking coal for pre-monsoon restocking.