South Eastern Coalfields Ltd (SECL) concluded a spot auction for 860,000 t of non-coking coal scheduled for 19 July, 2022. The entire quantity was booked. The grades offered were in the range of G5-G15, of which the quantity for G15 grade was 450,000 t.
There was no spot e-auction held in June. The previous auction was held in May.
In the July auction, 867,000 t of coal was booked at a total value of INR 565.70 crore (exclusive of taxes), with average prices realisation of INR 6,525/t. Bid premium was 413% over the notified price.
In May, the average realisation at spot auction was INR 7,853/t and the bid premium had risen by 495%.
The decline in bid premium now is indicative of a drop in bid prices.
Why bid prices fell?
- All the grades offered saw a drop in bid prices compared to the last auction.
- The sharpest fall in bid was seen for G14 and G7 grades of coal at with 40% and 32%, respectively.
The bid prices fell in tandem with demand for coal with the onset of the rainy season as industrial activities slowed down.
In addition, in previous spot auctions, coal prices touched elevated levels as the quantity offered by the CIL subsidiary was limited. This had an adverse impact on production costs and industries started to procure only limited quantities.
Sector-wise sales
- Traders brought 37% of the total quantity, this means 323,200 t of coal will be sold in the resellers’ market.
- Bharat Aluminium Company (BALCO) bought the second highest quantity of 197,300 t.
- Coal booked for power generation was 19% of the total quantity.
- The sponge iron sector booked 15.6 % of the total coal on offer.
The bid prices are still at elevated levels despite falling in recent auctions. For bid prices to ease further, CIL and its subsidiaries have to offer larger volumes at spot auctions.
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