South Eastern Coalfields Ltd (SECL) saw aggressive buying from the non-power sector in the recently-concluded auction, at a time when demand from the power sector is slowing down.
The company had offered 331,000 tonnes (t) of coal via the exclusive scheme meant only for the non-power consumers on 22 Dec’21. Indicating a robust demand, the entire volume was booked at a price realisation of INR 4,184/t, garnering a premium of 146% over the notified price of INR 1,698/t.
On the other hand, bid prices in the special forward auction earmarked for the power sector continued their downtrend in Dec’21, as SECL managed to get a premium of only 40% over the notified price.
The auction scheme had earlier fetched higher prices in view of the acute coal shortage faced by the power producers. However, with gradual build-up in coal inventory, there has been a steady decline in bid premiums compared to the highs of 174% seen in Oct’21. In Nov’21, the premium was recorded at 64%.
Disparity in coal offerings
Coal dispatches via the fuel supply agreement (FSA) route were largely made to the power sector to satiate its elevated demand and the same has been extended in the auction sales too.
Notably, SECL resumed sales via the exclusive scheme in Dec’21 after a gap of two months, whereas the company was regularly conducting special forward auctions in this period (Oct-Dec’21).
Adding to the woes of the non-power sector, coal offerings in exclusive schemes were 67% lower than in the special forward auction held in Dec’21.
Consequently, the end-user industry was more competitive in the auctions as they quoted higher bids for the minimal quantity that was available.
Scheme-wise bid prices
SECL, like the other subsidiaries of Coal India Ltd (CIL), has a different set of prices for the power and non-power sectors for auction sales. Power being a regulated industry is offered coal at a cheaper rate.
Besides, the company had different grades of coal on offer for the sector-wise auctions held in Dec’21. In fact, high calorific value coal ranging from G5-G9 was offered specifically in the exclusive scheme.
(-) indicate no offer was made for the particular grade.
Bid prices are calculated on the weighted average basis for quantity sold.
Comparing prices that were common across grades, G10 was sold at INR 3,529/t in the exclusive auction, registering a rise of INR 1,595/t over the price assessed in special forward auction.
But, in case of G12, bid prices in the power sector’s auction were slightly higher by INR 20/t over non-power’s prices.
In particular, the exclusive auction witnessed a bid price higher by INR 2,000/t over the reserve price for all grades except G7 and G12. In contrast, bid premium over the reserve price in case of the special forward auction, was in the range of INR 693-827/t for G10 and G12 grades, while the remaining grades were sold almost at the base price.
Upcoming auction
Continuing with the series of auctions, Coal India has planned to sell 598,500 t of coal via the spot auction today, 31 Dec’21. The auction is open to all consumers, including traders, and may see high bid prices keeping in mind the prevailing strong coal demand.
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