State-run Coal India Ltd. (CIL) has registered lower sales via the auction route in tandem with the reduced coal offerings. The company’s sales in a series of auctions decreased 68% m-o-m to 4.01 mnt in Feb’22 against 12.39 mnt in Jan’22.
In the wake of prevailing restocking demand from the power sector, CIL’s coal supply was, at best, inadequete. To cater to elevated demand, the company has gradually increased its dispatches via fuel supply agreements (FSAs) thereby curtailing the volume put on sale for auctions.
Exhibiting a similar trend, the offered volume in Feb was significantly reduced to 6.34 mnt, down 63% m-o-m compared to 16.98 mnt in Jan.
In fact, no auction was scheduled by two of its major subsidiaries South Eastern Coalfields Ltd (SECL) and Northern Coalfields Ltd (NCL) during Feb.
No relief for the non-power sector
During Feb, CIL continued its support to the power sector by offering a bulk of 4.65 mnt of coal under the special forward auctions earmarked for power producers.
This came as a big blow for the non-power sector which is already reeling under the pressure of soaring prices in the international market. As a result, aggressive procurement was seen from the buyers in the remaining auctions meant for them.
Evidently, almost the entire lot offered in the spot and exclusive auctions was booked at a healthy premium of 270% and 154% respectively, over the notified price. In contrast, only half of the material was booked in the special forward scheme and that, too, at a minimal premium of 20%.
Scheme-wise Auction Summary
Quantity in mnt | Prices in INR/t
Outlook
There remain slim chances of a drastic improvement in the non-power sector’s coal supply, with demand from the power sector expected to escalate in the peak summer season.
However, the recent introduction of a single window for sales would certainly benefit these buyers as they can bid for a broader share of coal that is offered on a common platform inflicted by the merger of the different auction schemes.
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