Domestic coal miner Coal Indian Ltd (CIL) witnessed a spurt in demand for coal via the auction route in Jun ’21, driven by a gradual revival in economic activities and an increased appetite for pre-monsoon restocking.
Coal allocations, however, continued to downtrend on a monthly basis in tandem with the lesser volumes being offered for sale. Total sales were recorded 10% lower on the month at 5.76 mn t in Jun ’21 compared to 6.38 mn t in May ’21.
Nevertheless, allocations against offered quantities were was recorded at 56% during the month which was the highest since Feb ’20 (pre-Covid period). Besides, marking an improvement in terms of bid premium, the current month’s sales had attained a seven-month high gain of 27% over the notified price.
Sales still not up to the mark
Recovering from the Covid setback, CIL’s coal allocations via auctions increased 37% y-o-y to 27.28 mn t in the first quarter of FY ’22 (Apr-Jun ’21) compared to 19.97 mn t seen in the same quarter last year. However, the subsidiaries have adopted a wait-and-watch approach for offering coal in the auctions.
Notably, coal volumes put up for sale this quarter have fallen 44% y-o-y to 54.02 mn t compared to 95.74 mn t in the year-ago period.
While the month of Jun ’21 marked the return of Central Coalfields Ltd (CCL) into the auction fray, CIL’s largest coal producing subsidiary, Mahanadi Coalfields Ltd (MCL), did not feature in any auction window during the month.
It is important to note that MCL has been the worst performer in term of fetching bid premium. But the performances of the remaining subsidiaries have not been any better during the first quarter.
Subsidiary-wise Auction Summary in Q1 FY’22
Overall, bid premium over the notified coal price was 19% during the first quarter of FY ’22, up from 8% recorded in the first quarter of FY ’21. Notwithstanding the improvement, the premium was still lower than in the first quarter of FY ’20 (pre-Covid level), when it was at 46%.
Encouraged by the recent improvement, CIL is expected to raise offering in the auctions, especially in the exclusive scheme which had received better response among the various auction windows.
Scheme-wise Auction Summary in Q1 FY’22
Moreover, the prospect of coal exports is also on the cards for bolstering auction sales. This comes at a time when the company has exported for the first time to Bangladesh, nearly a month after tweaking its e-auction coal sales policy, lifting the restriction on exports.
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