Coal India Ltd (CIL) has witnessed a drastic fall in its sales recorded under the auction route during May ’21, in tandem with the lesser volume being offered for sale.
Auction sales decreased 58% month-on-month (m-o-m) to 6.38 mn t in May ’21 compared to 15.14 mn t in Apr ’21. Interestingly, the offered quantity in May ’21 was also reduced to 16.26 mn t compared to 27.52 mn t in Apr ’21.
Unlike the previous fiscal, when the company was seen offering bulk volumes via auctions in order to liquidate its surplus inventory, a watchful approach has been adopted this time to gauge the market pulse, especially in view of higher coal availability and re-surfacing of Covid restrictions.
During the first two months of FY ’22 (Apr-May ’21), the offered volume in the auctions fell by 39% year-on-year (y-o-y) to 43.78 mn t compared to 72.04 mn t in Apr-May ’20.
Scheme-wise auction summary
Spurred by the revival in coal demand from the power sector, an additional volume was put under the special forwards auction scheme, which is earmarked especially for the power producers. However, the quantity offered for sale under the remaining auction windows was slashed during the month.
It may be noted that CIL enjoyed enhanced sales in Apr ’21, buoyed by the higher allocations under the exclusive auction scheme for the non-power sector. However, with reduction in the offer volume, the allocations under this auction window decreased by a whopping 96% m-o-m to 0.42 mn t in May ’21.
Another reason for the fall in auction sales was the subdued response received for the special spot auctions, where buyers are expected to procure higher volumes as the minimum bid quantity compared to the other traditional (spot, exclusive and special forward) auctions.
Given the difficult market conditions, buyers have restrained themselves from procuring coal in these auctions. Notably, the entire coal volume offered under the ‘special spot for coal importers’ scheme was left unsold in the sole auction conducted during the month.
Indicating a gradual sign of revival, the premium fetched against the notified coal price has increased to 21% for the auctions held during May ’21 against 14% in Apr ’21. Encouraged by the recent uptrend, CIL is expected to raise offerings via the auction route at a time when buyers would turn active to book coal volumes for pre-monsoon stoking.
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