Coal India Ltd. (CIL) has seen a marginal increase in bid premium for coal sales via spot auctions in August, 2022. The bid premium was assessed at 312% over the notified price for August, which was 290% in July.
This marginal increase was due to higher prices fetched at the Western Coalfields Limited (WCL) and Bharat Coking Coal Ltd (BCCL) auctions, the latter particularly for coking coal grades, which received higher bid prices.
CIL offered a total of 4.58 million tonnes (mnt) of coal in August of which 4.26 mnt was booked at INR 2,850 crore.
Notably, this was the highest coal offering in the past three months. The offered volume in August increased by 76% m-o-m as against 2.66 mnt in July.
CIL’s subsidiaries, except Northern Coalfields Ltd (NCL), has conducted auctions in August. In contrast, only 4 subsidiaries had taken part in the auctions in July.
The increase in volumes offered indicates improvement in supplies via coal auctions as coal inventory at power plants have risen.
Factors supporting bid prices
The bid premium in WCL’s auction edged higher by 241% in August as against 189% in June. The company had not conducted any auction in July.
This came on the back of disruption in production and despatches owing to heavy rains, which had supported aggressive coal procurement from the buyers.
Meanwhile, in the case of BCCL, the bid premium fell to 120% in August as against 131% in July. However, there was a contrasting pattern seen in the bid premium for coal of different specifications.
It is to be noted that the company’s offering includes coking coal along with washery products like slurry and rejects. But, while its coking coal bookings was encouraging and received higher bids, sale of washery products was rather dull.
On the other hand, the remaining subsidiaries saw a fall in bid prices from the previous auctions. Nevertheless, the entire quantity offered by them got booked, which indicates robust demand led by the prevailing coal supply prioritisation to the power sector.
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