ECL’s Spot Auction Fetches 31% Premium in Feb’20

Eastern Coalfields Ltd (ECL) has concluded spot auctions for coal sales held in the month of Feb’20. Despite failing to manage sales of the entire offered quantity, the company had received higher premium comparable to the previous month’s auction.

ECL had put forward a sum of 4 LT (Lakh Tonne) coal over a series of auction held on 26th and 28th Feb’20, out of which 2.48 LT was sold.

The modest response in terms of quantity sold was inflicted by subdued sales in rail-mode of auction, which had failed to incite adequate participation from the buyers. Incidentally, entire lot of G4 grade of coal offered from Uka-V colliery remained unsold in the auction.

However, the overall sales had fetched superior bid price of INR 5338.31/MT, which was 31% higher than the assessed reserve price of INR 4087.1/MT in the auction.

Source: CoalMint Research
Quantity in MT
Prices in INR/MT

Detailed result from the auction can be seen here.

Key Highlights from the Spot Auction in Feb’20:

(a) A break-up of auction results based on mode of coal dispatch indicates that almost the entire quantity was sold in the road-mode of coal sales. Whereas, in case of rail-mode only 45% of the material was booked that too at a relatively lower premium.

(b) The only lot of coking coal having the highest floor price in the auction had received moderate response, for which bids in excess of INR 300-400/MT were noted over the base price. In turn, the highest bid of INR 7758/MT was fetched for G3 grade of coal offered from Jambad OCP.

(c) Highest coal quantity was offered for G4 grade, which had received mixed response in the auction. It also comprised the unsold quantity left-over at the end of auction process, while entire quantity floated from the remaining lots was booked.

Apparently, 33% of the sold G4 material was booked at premium of INR 1000-3000/MT over the base price.  While remaining material procured bids which were seen below INR 1000/MT. The lot comprised 43,754 MT coal sold from Madhaipur OCP and PAW-II, which had received bids in excess of INR 0-20/MT.

(d) The remaining lot of coal pertaining to G5 and G6 grades had witnessed decent return garnering a premium of 46% and 43% over the respective base prices.

ECL’s Auction for Power Producers:
A separate special forward e-auction entitled for power producer had witnessed zero turn-out from the participants, wherein 8 LT of coal was offered via rail mode on 28 Feb’20. As per the officials of ECL, not a single rake of coal was booked under this auction.

Heading towards the end of the current fiscal, CIL and its subsidiaries have subsequently raised the amount of coal offered in the e-auctions, in line with the improved production. It is expected that ECL would put forward additional quantities for sales during Mar’20, in order to earn a decent sum from the auction.