India: Domestic coal prices in resellers’ market see steep fall amid selling pressure

The resellers’ market saw a sharp decline in domestic coal prices by up to 10% w-o-w.

The downtrend in prices followed suit of the persistent fall seen in bid prices at coal auctions. In addition, selling pressure was there among traders amid low demand.

The prices of 4,500 gross calorific value (GCV) coal in Wani, Maharashtra, were down by INR 950/tonne (t) w-o-w to INR 8,650/t on 30 December.  Meanwhile, the prices of 5,000 GCV coal in Chhattisgarh’s Bilaspur were assessed at INR 8,600/t, a drop of INR 1,000/t w-o-w.

Fall in demand

Market participants in Wani and Bilaspur informed CoalMint that coal demand is very limited amid a slowdown in the industrial sector.

The steel and iron industry’s limited procurement of coal on the back of inventories of their manufactured product that are unsold, played a significant role.

“Industrial demand is not even half as compared to last year,” a coal trader from Bilaspur told CoalMint.

There is almost little buying from the power plants in Chhattisgarh. Meanwhile, there is a tepid response from cement manufacturers as well. Notably, the cement and power sectors are the biggest consumers of coal at the resellers’ market in Chhattisgarh.

Coal traders in Chhattisgarh are receiving regular inquiries from brick manufacturers in Madhya Pradesh and Uttar Pradesh. However, demand for coal by brick manufacturers in Wani remained subdued.

Surplus supply

The coal production and supplies have improved after the monsoon. As a result, they have sufficient supplies through auction.

The traders are finding it difficult to liquidate the bulk material that was procured in these auctions.

Traders in Wani told CoalMint: “Lower priced coal from Thangadh, Gujarat, is coming to Wani, which is also putting pressure on the prices.”

Market participants have also informed CoalMint that use of alternate fuels like, coal briquettes, wood pellets, rice husk, coconut fiber, and soy residue have significantly increased, and there has been a surge in investment in biofuels after coal prices surged during summer.

Outlook

In the near-term, market participants are anticipating that prices will continue to fall as they expect chances of demand revival are minimal.

In addition, fresh concerns regarding the Covid situation emanating from China, could spark a negative outlook for the domestic coal market.