Domestic coal prices in the resellers’ market have moved in opposite directions this week. Coal prices in Wani, Maharashtra, saw a steep fall of 9% triggered by optimism regarding improvement in supply.
Meanwhile, in Bilaspur, prices rose marginally by 2.5% amid supply concerns. However, it is to be noted that prices had remained stable last week.
Wani: Improving supply weighing on prices
The prices of 4,500 gross calorific value (GCV) coal in Wani recorded a steep fall of INR 1,000/t w-o-w to INR 11,500/t on 14 October, 2022.
The drop in prices this week was induced after the announcement of fresh auctions. It is to be noted that Western Coalfields (WCL) will conduct an auction for 266,500 t of coal on 19 October.
This is the third consecutive month that the company is going to conduct an auction, the offerings in which are progressively increasing.
Market participants are expecting a drop in bid prices in the upcoming auction in view of the anticipated increase in production levels post-monsoon.
In addition, not much improvement was recorded on the demand side as buyers are awaiting further correction in prices. As a result, it is likely that buyers would procure minimal volumes in the coming month.
Bilaspur: Limited stock pushing up prices The prices of 5,000 GCV coal in Chhattisgarh’s Bilaspur were assessed at INR 12,000/t on 14 October, up INR 300/t w-o-w. However, the hike was induced by limited availability of coal stocks with traders.
South Eastern Coalfields’ (SECL) last auction was held on 29 August 2022 in which, 0.46 mnt of non-coking coal was offered. Since then, no auction has been announced.
CoalMint learned that some traders are left with no coal stocks.
On the demand side, brick manufactures are gradually returning to the market as they resume coal restocking. However, they are procuring in limited volumes after the production schedule was delayed amid continued rains.
Outlook
The average daily production and dispatches by Coal India during 1-13 October 2022 stood at 1.56 mnt and 1.62 mnt respectively. Both the parameters have marginally improved m-o-m. However, these have exhibited a fall y-o-y.
The shortfall was more in dispatches as the company’s coal inventory at mines fell below 30 mnt in September-end, for the first time since December 2019.
The current situation indicates that the coal supply situation is not expected to improve any time soon and that lower allocation to the non-power sector would continue to be a concern.
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