Bharat Coking Coal Ltd (BCCL) has witnessed renewed interest for its coal sales under the special spot auction meant exclusively for coal importers.
The company managed to sell 608,000 tonnes (t) of the 692,000 t offered in the latest auction held on 9 Aug’21. It was the highest allocation seen in the special spot auction for coal importers ever since this scheme was introduced in Oct’20.
The previous round of auctions had received tepid response as coal procurement happened only in smaller lots. However, with imported coal prices gathering steam, the coal importers had shown greater appetite for coal which was available in the auction at a comparatively lower price than the imported grade.
Interestingly, no such demand was seen in the regular spot auction during the month wherein out of the bulk 777,500 t put on sale, only 21% of the volume was booked.
Bid premium
BCCL’s special spot auction for coal importers offers coking coal grades at a lower reserve price than the remaining auction schemes. Notably, the upper cap on the notified price for affixing the reserve price in the said auction is 20%, while that for spot auctions the upper cap is 35% and in case of exclusive auction it is 25%.
The provision entailed hefty coal buying in terms of volume, but didn’t garner a substantial rise in bid premium which was assessed 29% higher than the notified price.
Washery grade IV (W-IV) coal was booked at an average price of INR 3,973/t, attracting premium of INR 196/t over the reserve price, whereas, the lower grades of coking coal were booked at the reserve price.
In contrast, the bid price quoted for the sole lot of non-coking coal fetched a higher premium of INR 1,708/t over the reserve price.
Grade-wise auction summary
Momentum to continue?
BCCL has been the worst performer among the Coal India subsidiaries for auction sales. During the first four months of FY’22 (Apr-Jul’21), the company has sold 0.63 mn t coal out of the 8.95 mn t offered on sale.
Subsidiary-wise auction results
Incidentally, the allocated quantity is the lowest among the various subsidiaries, which is a reason of concern at a time when offerings in these auctions was the third largest behind MCL and SECL.
Nonetheless, the company is expected to gain further market share by bolstering auction sales as the end-users will look for alternatives to satiate their requirements given that imported coal prices are steadily rising.
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