India: CIL’s coal allocation in auctions drops by 44% m-o-m in Nov ’20

Coal India Ltd’s coal allocation via auction route has decreased 44% on the month to 9.36 mn t in Nov ’20 compared with 16.81 mn t in Oct ’20 in line with the drastic reduction seen in the quantity being offered for sale.

Notably, apart from special spot auction for ‘coal importers’, coal volume offered in other auction schemes were decreased during the month. (Detailed subsidiary-wise auction summary can be seen here).

Another round of newly introduced special spot auctions for ‘coal importers’ carried out by the subsidiaries namely-ECL, BCCL and MCL saw highest percentage allocation. Moreover, booked quantity recorded in the auction jumped 2-folds to 3.3 mn t during the month.

In contrast, no coal was offered in the ‘original’ special spot auction which is open for all sorts of buyers.

Tepid demand from the power sector was overcome by raising coal sale to the non-power sector. Interestingly, the company managed allocation of 0.6 mn t in exclusive auction during Nov ’20 contrary to nil sales noted in the year-ago period. On the other hand, allocation in special forward auctions for power producers was down by 66% y-o-y to 1.38 mn t in Nov ’20.

Quantity in Million Tonnes (mn t)

Spurt in Price Realization:

Decision to resort to old regime of price fixation helped CIL to garner higher price realization for coal sales, as the subsidiaries were provided with the freedom to set upper cap on notified as per market conditions.

Price realization for the month of Nov ’20 increased 42% m-o-m to INR 1891/t compared with INR 1337/t in Oct ’20. Besides, highest gain over notified price was also recorded for the fiscal, assessed at 30% during the month.

Recent price revision along with sluggish dispatch to power sector on account of winter season could provide a stern test for CIL going forward, but the company is expected to extend its reliance on non-power consumers to expand its sales volume.