Mahanadi Coalfields Ltd (MCL) registered robust sales in the recently-concluded spot auction as prevailing fuel shortage compelled buyers to raise their bids in a competitive market.
The company had conducted sales of 1.6 million tonnes (mn t) of coal on 21 Sept’21, of which 1.35 mn t was sold. In the process, aggressive bidding was seen, resulting in higher prices.
Overall, the booked volume fetched a price realisation of INR 2,095.81/tonne (t), registering an increase of 107% over the assessed notified price of INR 1,010.53/t.
Similar response was also noticed for Eastern Coalfields (ECL) which had recorded bid premium of 121% in the spot auction during Aug’21.
However, it may be noted that the case of MCL is different as it majorly offers coal having low calorific value (CV).
Grade-wise auction summary
The latest auction featured sales of G12-G15 grades, while a small volume of 8,000 t was offered under G8 in the high CV band.
Incidentally, the sole lot of G8 was sold at a price realisation of INR 4,107/t, around INR 2,340/t higher than the notified price.
Quantity in Metric Tonne | Prices in INR/t
Lower grades also saw a rise in bid prices compared to the previous month’s auction. But, G15, being an exception, was left unsold for the second month running.
In fact, price realisations for G14 in the latest auction were at a higher level than G12 and G13.
Supply tightness led to panic buying?
A study of the colliery-wise results shows that G12, offered from Jagannath mine, had received the highest bid price of INR 14,458/t, which is even higher than the prevailing offers for imported coal at port sides.
Bid Summary for G12 Coal
As per CoalMint’s assessment, offers for South African 5,500 NAR were recorded at INR 11,100/t ex-Gangavaram (exclusive of taxes) which is premium grade coal compared to MCL’s G12.
Nonetheless, the elevated price from the lot of G12 does not indicate fair market conditions as the average price came to around INR 2,047/t from the same colliery. Moreover, the average bid price from the remaining collieries offering G12 were also in the range of INR 1,700-2,000/t.
However, there is case for a strong demand for domestic coal which is expected to continue till the power plants’ coal crisis is resolved.
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