Domestic coal prices remained range bound in the reseller market last week with market conditions remaining stable. Despite limited demand, prices were supported by the supply shortage.
Prices saw a marginal fall in Wani, Maharashtra in the week under review whereas in Bilaspur, it fell by 4-7%.
Wani: Traders in wait-and-watch mode
The prices of 4,500 gross calorific value (GCV) coal in Wani, Maharashtra, were down by INR 100/tonne (t) w-o-w to INR 13,300/t on 17 September. Nevertheless, prices are up by INR 300/t m-o-m.
Prices are range bound w-o-w as market participants are awaiting the outcome of the upcoming Western Coalfields Ltd’s (WCL’s) coal auction for 222,000 t on 20 September. In addition, there was not much improvement seen in industrial activity.
Meanwhile, on the supply side, heavy rains continued to slow down the pace of WCL’s production and dispatches. The company could only produce 50% of its daily target last week, while in the previous week, it produced 70%.
The similar trend was seen in offtake where the miner could only meet 75% of the daily target as compared to 91% in the previous week.
The miner has been struggling with incessant rains since July, impacting coal supply in the region.
Bilaspur: Limited demand from power sector
The prices of 5,000 GCV coal in Chhattisgarh’s Bilaspur were assessed at INR 12,100/t on 17 September, almost unchanged w-o-w.
However, only few enquires were seen. “There is very limited demand from the power sector, while orders from other sectors have not improved,” a trader told CoalMint.
“Due to Pitru Paksha/ Shradh, orders are down but we are expecting an increase in demand with the beginning of Navratris,” said another trader.
On the supply side, some mines of South Eastern Coalfields Limited (SECL) have high pendency in offtake, and the company is finding it difficult to initiate dispatches against the pending orders, creating the short-term supply gap.
Outlook
Coal India Limited (CIL) has showed subdued performance in the first half of September.
The company’s daily coal production was assessed at 1.52 mnt/day during 1-16 September, registering a nominal growth of 2% compared to 1.49 mnt/day in the corresponding period last year (CPLY).
In the similar time-frame, higher dispatches were maintained compared to the production, as the company supplied coal at an average of 1.65 mnt/day. Nonetheless, the dispatch rate was lagging behind the year-ago levels.
Given the priority accorded to power sectors in terms of coal supply, it seems unlikely that CIL would increase coal volume under auction sales, especially at a time when the festive season is around the corner.
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