Mahanadi Coalfields Ltd (MCL) has witnessed a spurt in bid prices for sales concluded via spot auction as prevailing supply tightness has compelled buyers to raise their bids in the competitive market.
In the recent auction held on 21 Feb’22, the entire volume of 1.1 mnt was sold out at an average price of INR 5,100/t, which was around 412% higher than the accessed notified price of INR 996/t.
A grade-wise break-up of coal offered in the auction indicates that G9 grade was sold at a bid price of INR 9,019/t, gaining from INR 7,365/t over the floor price, which was even higher than the bid received for the superior grade G8.
On a similar note, low-calorific value coal in the range of G12-G14 were also sold at bids in excess of INR 3,000/t.
Quantity in Metric Tonne (t) | Prices in INR/t
Price supported by lower offerings
Driven by the abrupt rise in global coal prices, Indian buyers have made a gradual shift towards the domestic market.
However, with coal companies prioritising the power sector, a minimal quantity offered in these auctions resulted in aggressive procurement from the non-power sector.
Notably, the latest spot scheme of auction was held after a month’s gap by MCL. Adding to the woes of the buyers, the offered volume in Feb was the lowest in the current fiscal, down 47% compared to 2.1 mnt that was put on sale in Dec.
The company did offer bulk 9.7 mnt for auctions in Jan, but it was against the special forward scheme which is earmarked solely for the power producers.
Price disparity with imports
Despite the robust sales, auction prices are still cheaper compared with imported grades.
A comparative analysis indicates that the loaded price of G9 coal (including revenues, taxes and other charges) stood at INR 11,962/t, which was around INR 5,000/t less than the price of South African 5500 NAR coal available at portsides.
With global coal prices showing no signs of slowing down, buyers are likely to remain active in auctions by aggressively procuring their share of coal until there is rapid improvement in the supply situation with increased production.
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