India: Coal prices in reseller market stable in Wani, drop sharply in Bilaspur

Domestic coal prices in the reseller market saw a mixed trend this week. Coal prices at Wani, Maharashtra, remained stable while In Bilaspur, Chhattisgarh, prices witnessed a steep decline.

Prices of 4,500 gross calorific value (GCV) coal in Wani stood at INR 8,650/t on 13 December, 2022.  Meanwhile, prices of 5,000 GCV coal in Chhattisgarh’s Bilaspur were assessed at INR 7,700/t, down INR 900/t w-o-w.

Selling pressure persists

Prices in Wani remained stable w-o-w amid the reluctance shown by traders to reduce prices further. Prices have corrected by more than 20% in the last two months. However, it is difficult for traders to hold prices for a long time amid low demand.

Meanwhile in Bilaspur, prices fell because of selling pressure and the announcement of a fresh auction by SECL, with 1.44 mnt of coal to be offered.

Demand lag persists

On the demand side, there has been no noticeable improvement. The slowdown in industrial activity has restricted coal procurement. The textiles and agro-industries have witnessed a slowdown in growth compared to last year.

The power sector has adequate supplies through other routes and is not procuring coal in the reseller market.

“There is limited spot buying and we are not receiving enquiries for prior booking,” a trader from Wani told CoalMint. “This is because there is enough supply while coal prices are consistently falling,” he informed.

However, the cement sector has ramped up coal procurement. Notably, both Wani and Bilaspur are cement producing hubs.

Changing coal consumption trends

Market participants have indicated a change in coal consumption patterns. Imported coal is available at domestic locations and can be easily sourced thanks to improvement in logistics facilities. Moreover, imported coal is qualitatively superior to domestic material.

In addition, the supply of alternative fuels such as biomass briquettes, white coal, and firewood, as well as wood pellets has increased amid increased support from the government and a surge in coal prices during CY22.

Outlook

In the near term, it is expected that prices are likely to fall further. Market participants are not ruling out the possibility of prices falling to CY21 levels.