Coal price realization per ton during the Apr-Oct’16 period for Coal India Limited (CIL) was lower than that in the Apr-Oct’15 period as weak demand and bleak outlook impacted the prices during the period under review.
According to the latest inputs received, the price realization per ton was lower by INR 86/MT, at INR 1,344/MT, during the period of FY17. During the same period of the previous fiscal, the price was at INR 1,430/MT.
The impacts of rising global prices and CIL’s price hike in May this year were thus countered by the lower demand in the country.
CIL had hiked its coal prices by 6.29% per ton with the intent of earning additional revenue of INR 3,234 crore during the current fiscal. Prices of the lower coal grades (G8-G13) were raised by 13.60-18.03%, while, higher coal grades were subjected to reduction in prices. As a matter of fact, lower coal grades are extensively used by the power companies, and the grades account for around 80% of CIL production.
Not only off-take by the power sector declined during the period, sales in E-auctions also were lower. In an apparent mismatch, E-auction volume increased to 39.52 MnT, but the average price per ton declined by 27% to INR 1,463/ton.
Although the market outlook is bleak, some market participants speculate domestic demand to strengthen due to higher global prices.
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