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

Last week, coal prices at Wani, Maharashtra saw a sharp decline while prices In Bilaspur, Chhattisgarh remained stable.

Prices of 4,500 gross calorific value (GCV) coal in Wani stood at INR 7,700/t on 4 February, 2023, a drop of INR 950/t w-o-w.

In Wani, there was a steep fall in prices amid surplus availability of coal stock. Monthly average offering by Western Coalfields Ltd (WCL) has increased by 50% in the second half of FY23.

In addition, the fall in imported coal prices was also weighing down domestic coal prices.

A trader from Wani informed Coalmint, “We are receiving only limited orders from sugarcane processing industries amid a fall in imported coal prices.”

Prices in Bilaspur unchanged

Meanwhile, prices of 5,000 GCV coal in Chhattisgarh’s Bilaspur were assessed at INR 7,700/t on 4 February, 2023, unchanged w-o-w.

Prices in Bilaspur, Chhattisgarh, have not increased as there are sufficient supplies despite a marginal increase in demand. South Eastern Coalfields Ltd (SECL) had offered 2 million tonnes (mnt) of coal via auction during H1 FY23. However, the offering increased to 6.5 mnt from October 2022 to February 2023.

Meanwhile, prices did not fall because traders were reluctant to drop offers as the latest South Eastern Coalfields Limited (SECL) auction on 16 January received a higher bid premium. The bid premium over the notified price in the January 2023 auction was 278%. However, in December 2022’s auction, the bid premium was 180%, and in November 2022’s auction, it was 225%.

Marginal improvement in Demand

There was a marginal improvement in demand, driven by procurement from brick manufacturers in Wani and Bilaspur.

The need for coal from brick producers is at its peak at this time of year, brick kilns have started to operate across the country’s brick production regions.

Notably, brick kiln activities begin later in northern India than in other regions of the country.

Market participants, however, informed CoalMint that this year’s demand for coal is lower than last year’s.

Meanwhile, coal demand from iron and steel sector has seen a marginal uptick in Bilaspur. However, buying from end-users from other sectors have not witnessed any major improvement both in Bilaspur and Wani.

Outlook

In the near-term, prices are expected to increase. Market participants anticipate more offerings (quantity-wise) because coal companies have to meet their targets until March, 2023.