State run miner-Coal India Ltd (CIL) has initiated coal sales under the single window in Mar’22, by merging various sector-specific auctions on to a common platform under the spot scheme. This also means no separate auction would be held henceforth for power and non-power sectors.
Two of its subsidiaries, Eastern Coalfields Ltd (ECL) and Northern Coalfields Ltd (NCL), were the first to offer coal under the revised scheme on 3 Mar’22, and both received overwhelming response from the buyers.
In case of ECL, the entire volume of 0.2 mnt was sold out at an average price of INR 13,501/t, garnering a premium of 311% over the accessed notified price of INR 3,281/t.
Exhibiting similar trend, NCL fetched price realization of INR 7,904/t for coal sales, which was around 381% higher than the accessed notified price of INR 1,644/t.
The latest spot auctions by both these companies were held after a month’s gap. Notably, an uptick was registered in bid premium from the previous sale. In Jan’22, premium in case of ECL was 285% while that for NCL it was 326%.
Global cues supporting prices
Of late, coal prices in the sea-borne market have witnessed a steep rise emerging from the geo-political conflict between Russia and Ukraine.
This came as a big blow to the buyers who are reeling under the pressure of supply tightness as they had to raise their bids in the competitive market.
Keeping consistency with the imported coal, the auction saw higher bid prices for the premium coal put on sale. The highest bid price was recorded for G3 at INR 13,865/t, registering a gain of INR 9,585/t over the reserve price. But, G5, being an exception, was sold at a lower price than G6 and G7 grades.
Grade-wise Auction Summary
Prices in INR/t
However, these prices, despite seen at an elevated level, remain cheaper than the imported material.
A comparative analysis indicates that the loaded price of G3 coal (including revenues, taxes and other charges) stood at INR 16,657/t, which was around INR 3,000/t less than the price of South African 5500 NAR coal available at portsides.
Going forward, the prices in auction are expected to remain elevated in tandem with the increased demand from the power sector as buyers would seek additional supplies during the peak summer season to maintain adequate inventories.
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