Domestic coal prices in the reseller markets showed divergent trends last week. Coal prices dropped in Wani, Maharashtra, while in Chhattisgarh’s Bilaspur prices edged up.
Prices of 4,500 GCV coal in Wani stood at INR 7,225/t on 18 March, a decrease of INR 475/t w-o-w, while 5,000 GCV coal was assessed at INR 8,200/t in Chhattisgarh’s Bilaspur, an increase of INR 500/t w-o-w.
Reseller prices emulating bid premium
In Wani, prices at the reseller market fell by 6% as bid premiums at auctions held in February edged lower. The premium over the notified price in auctions conducted by Western Coalfields Limited (WCL) in February stood at 69%, while in January it was 120%.
CoalMint observes that the price fall could have been much steeper but traders were reluctant to cut prices.
A trader from Nagpur said: “There have been auctions every 20 days for the last two months and bid premiums are continuously falling in every auction. We are under constant pressure to decrease prices but our ability to absorb the loss is limited.”
In addition, there is supply tightness despite increased volumes being offered in auctions due to delays in dispatches from mines.
In Bilaspur, coal prices in the reseller market increased by 6.5% y-o-y after the recent SECL auction on 21 February received higher bids than the previous auction. The bid premium was 208% in the SECL auction on 7 February. However, as per sources, the rise in prices is only for the time being.
In SECL auctions, there was participation from large industries procuring higher quantities for their captive power plants. Captive power producers are stockpiling in anticipation of increased demand during summer. This wasn’t the situation in WCL auctions, though.
Limited demand in reseller market
There was limited demand both in the Wani and Bilaspur markets. In both the reseller and retail markets, coal procurement from the cement sector remained limited.
Brick manufacturers in Wani stepped back from buying because of the rains last week. Demand from the sugar industry remains subdued. However, demand from the agro-industries is healthy.
In Bilaspur’s reseller market, coal procurement from the steel and iron industry and brick manufacturers remained stable compared to last week.
However, in both markets, coal procurement from lime producers increased with the drop in prices. Lime producers’ operations have suffered heavily in the past due to the surge in coal prices.
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