After a brief spell of absence from the auctions fray, Coal India Ltd (CIL) has made a sensational return by increasing coal offerings during Nov’21.
Offered volume in the series of auctions held in Nov’21 saw an exponential growth of 1,100% on a monthly basis to 19.47 million tonne (mn t), of which 13.32 mn t coal got booked.
Notably, all its subsidiaries, except Northern Coalfields Ltd (NCL), had held an auction during the month.
It is important to note that sales via the auction route in Oct’21 were curtailed in view of the acute coal shortage faced by power plants. In fact, CIL had even directed its subsidiaries to refrain from conducting auctions in order to augment dispatches via fuel supply agreements (FSAs) route.
With gradual improvement in supplies, auction sales have resumed much to the relief of coal consumers. But, this has negatively impacted gains in the bid premiums fetched over the notified coal price as it further came down to 84% in Nov’21.
Scheme-wise auction summary
Quantity in mn t | Prices in INR/t
Preference to power sector continues
Of late, coal inventories at the power plants are rising, yet demand for restocking persists as the assessed stock is below the normative levels.
As a result, the subsidiaries had shown greater appetite in offering coal to the power sector. Incidentally, almost 58% of the total volume in Nov’21 was offered under the special forward scheme which is earmarked for the power producers.
However, with gradual build-up in coal inventory, there was lesser urgency from the buyers, as evident from the decline in the premium fetched over the notified price from 174% in Oct’21 to 50% in Nov’21.
On the other hand, coal in the remaining auction schemes was booked at comparatively higher premium on the back of steady demand from the non-power sector.
In the first eight months of FY’22 (Apr-Nov’21), CIL has offered a total of 124.88 mn t of coal, down 51% y-o-y from 255.79 mn t in the corresponding period of FY’21. There remains a risk of further downside which will mostly depend on demand from the power sector, going forward.
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