Bid premiums at spot auctions conducted by Coal India Ltd. (CIL) fell for the second consecutive month in October 2022. The bid premium was assessed at 242% over the notified price for October. The premiums were 276% in September and 312% in August.
Notably, the bid premium has now corrected to pre-summer levels, indicating growing optimism in the market as supply is expected to improve in the second half of the financial year (FY23).
The decline in bids at the South Eastern Coalfields Ltd. (SECL) and Western Coalfields Ltd. (WCL) auctions contributed to the fall in overall bid premiums. However, it should be noted that the bid premium is still on the higher side: in October 2021 it was 134% over the notified price.
CIL offered 3.15 million tonnes (mnt) of coal at spot auctions in October of which almost the entire quantity was booked at INR 2,158 crore.
The quantity offered was on the lower side, as the biggest coal producing subsidiary of CIL, Mahanadi Coalfields Ltd. (MCL), did not conduct any auction in October. Neither did Central Coalfields Ltd. (CCL) and North Eastern Coalfields Ltd. (NECL).
Subsidiary-wise analysis
SECL’s spot e-auction in October fetched a bid premium of 275% over the notified price – a major decline compared to the last auction in August when the premium had touched 365%. Bid prices fell as there was a substantial increase in coal offerings compared to the last few auctions. The miner offered 1.42 mnt in October compared to 0.46 mnt and 0.87 mnt in August and July, respectively.
Similarly, bid prices in the WCL auction fell due to improvement in supplies which were affected by rains in the previous months. In October, the bid premium dropped to 145% as against 176% in September.
Notwithstanding the decline seen in SECL and WCL auctions, the bid premium for the remaining subsidiaries recorded a modest increase.
The bid premiums for Bharat Coking Coal Ltd. (BCCL) and Northern Coalfields Ltd. (NCL) remained rangebound. In the case of NCL, the premium was 308% in September and 311% in October. Similarly, BCCL’s bid premium was 119% from 114% in the previous month.
However, ECL’s bid premium rose to 252% in October against 236% in September.
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