Domestic coal prices in the resellers’ market remained stable as demand did not pick up despite the festive season.
Prices of the 4,500-GCV coal in Wani, Maharashtra were recorded at INR 11,500/tonne (t) on 21 October, 2022, unchanged w-o-w. Traders are reluctant to reduce offers further as prices have already fallen by INR 1,800/t m-o-m.
Meanwhile, in Chhattisgarh’s Bilaspur, 5,000 GCV was assessed at INR 12,000/t on 21 October, 2022. Prices remained unchanged w-o-w as there is a stalemate in both demand and supply situations.
Notably, last week, in Wani, there was a price correction of about 9% while in Bilaspur, prices rose marginally by 2.5% last week.
Muted demand persists
The demand and offtake of coal, both in Wani and Bilaspur markets, have not improved as was expected initially. One of the reasons is continuation of rains due to which brick manufacturers are deferring operations, waiting for the soil to become dry.
Untimely rains have also negatively affected coal requirement from agro-industries as their raw material (agro-products) supplies have been hampered. For similar reasons, industries such as construction and cement are not operating in full swing.
Meanwhile, the steel mills are not interested in procuring high-priced coal through traders owing to limited demand. Traders procure coal through spot auctions which is costlier. As a result, these industries are relying on supplies via fuel supply agreements (FSAs) and linkage arrangements with CIL — which are low priced.
Outlook
In the near term, prices in both the markets are expected to fall. In Wani, the chances of price corrections are more as bid prices have fallen in Western Coalfields Ltd’s (WCL) recent auction on 19 October.
Meanwhile, in Bilaspur, market participants are expecting prices to drop as South Eastern Coalfields Ltd (SECL) will come up with a higher offering of 1.4 mnt in its auction on 28 October.
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