Domestic coal prices at the reseller’s market dropped this week as supplies improved. However, there was a contrasting pattern seen in the price decline.
Prices at Wani extended their declining trajectory, but compared to previous week this week’s drop was marginal. On the other hand, prices at Bilaspur fell by 4-7% w-o-w, indicating the opposite trend compared to the previous week when prices rose.
Wani: Marginal price fall
The price of 4,500 gross calorific value (GCV) coal in Wani, Maharashtra, was down by INR 150/tonne (t) w-o-w to INR 13,400/t on 9 September, 2022. Nevertheless, prices are up by INR 400/t m-o-m.
The prices have begun to surge since mid-July amid shortage of coal supply because of heavy rains. Notably, coal miner, Western Coalfields Limited (WCL), only managed production and dispatch target by 35% and 65% respectively in July.
However, with the monsoon situation easing, WCL registered an improved performance. During 1-7 September, the miner achieved 70% of its production target. In terms of dispatches, 91% of the target was met.
This has been the major reason for the price correction in recent weeks.
Commenting on the market situation, a trader said: “Prices have fallen slightly but these are still at an elevated level. We are facing pressure to cut offers as buyers are looking to procure imported coal which is cheaper.”
Meanwhile, near-term trade level prices are likely to remain elevated, supported by infusion of higher price material booked in the recent auction. Bid premium in WCL’s auction rose to 241% in August compared to 185% in June when the previous auction was held.
Bilaspur: Prices dip amid fall in bids
The price of 5,000 GCV coal in Chhattisgarh’s Bilaspur was assessed at INR 12,100/t, a drop of INR 500/t w-o-w on 9 September.
The drop in prices was due to improvement in coal supplies where South Eastern Coalfields Limited (SECL) conducted successive coal auctions in the July-August period.
Consequently, amid higher offerings, bids in these auctions have come down. The bid premium over the notified price rose to 495% in May, which fell to 413% in July and 365% in August.
Outlook
In the coming months, coal demand is set to increase as there will be an uptick in industrial activity after monsoon.
Meanwhile, coal traders across the county are facing uncertainty over prevailing supply concerns. Traders are anticipating good demand in the near term but are left with no choice than to procure in small packets thinking that if they procure at high bids and later supply improves, it would be an uphill task to dispose the material.
However, market participants are hopeful of increased coal offering from CIL as inventories at power plants have increased.
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