South Eastern Coalfields Ltd (SECL) witnessed an uptick in demand for coal at its spot auction as buyers opted for the domestic material in view of the increased offers for imported grades.
In the auction held on 20 Jul ’21, the company managed to sell 625,900 tonnes (t) of the 1,165,900 t offered. Coal allocation increased 48% m-o-m from 421,600 t from Jun ’21.
However, not much improvement was seen in the bid prices on account of sluggish demand for sponge iron in Central India which failed to support buying interest.
Notably, the allocated quantity in Jul ’21 garnered a premium of 49% over the notified coal price which was almost similar to the levels seen in the previous month’s auction.
Preference for high GCV coal
Elevated stock and sale offers for imported coal assessed at INR 8,600/t Ex-Gangavaram prompted sponge iron units to opt for equivalent grades in the domestic market which had received competitive bids in the auction.
Consequently, coal in the GCV range of G5-G10 saw renewed interest from the buyers, where out of 221,500 t put up for sale, only 15,000 t were left unsold.
Besides, these coals also fetched higher bids over the reserve price. The highest bid price of INR 4,629.58/t was for G6 grade, but G9 stood superior than the rest of the lot as it managed to garner an almost two-fold increase in the bid price to INR 2,713.27/t against the notified price of INR 1,378/t.
On the other hand, coal in the lower GCV range did not receive such support and witnessed subdued sales with the allocated quantity getting sold at the base price.
Upcoming auction
SECL has maintained a limited approach towards its coal offerings in the auctions despite an excess inventory of 18.47 mn t at the end of Jun ’21. In fact, the current spot scheme has been the only auction conducted during the month so far.
Nonetheless, making a swift return to the auction fray, the company has scheduled the fourth phase of its special forward scheme on 4 Aug ’21, wherein 566,000 t of coal will be offered for sale to the power producers.
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