India: Sponge Iron Sector Booked 54% Coal in SECL’s E-Auction

South Eastern Coalfields Ltd (SECL)-CIL’s largest coal producing subsidiary, has witnessed overwhelming response from the Sponge Iron fraternity in the recently concluded exclusive e-auction.

Sponge Iron manufacturers had purchased 201,250 MT coal in the auction, accounting to 54% of the total offered quantity of 371,000 MT floated in the auction held on 29 Jun’19.

SECL had termed the current auction as the phase-I of exclusive e-auction offering coal for 3-month period (Jul-Sep’19), which entitles buyers to procure coal over a longer lifting period against the booked quantity as per their convenience.

Unlike the spot e-auction and special forward e-auction concluded during the month, coal volume of 300 MT was left unsold in the current exclusive e-auction. Besides, the premium of 19% fetched over the notified price, was also comparatively lesser than the previous held auctions.

Apparently, an average bid price of INR 1504.83/MT was received against the reserve price of INR 1265.23/MT assessed for the auction.

For the exclusive e-auction, SECL had offered the total coal volume across 7 grades from its various mining areas. A broad classification indicates that the coal grades had ranged from higher CV (G-6, G-7 and G-9) to lower CV (G14, G15, G16 and G17).

Bid price in excess of INR 600-900/MT was fetched above the reserved price for the high CV coal offered in the auction, except that from Vijay West area which had gained INR 80-100/MT over the base price.

G-9 grade of coal offered from Mahan II had gained the highest premium amongst the others.

While, a slack premium of INR 10-220/MT was assessed for the low CV coal material. Interestingly, nearly 97% of the coal from the lowest marked coal grade, G17, was booked at the base price.

Source: CoalMint Research
Prices in INR/MT
Quantity in MT

Major Coal Receivers:

Exclusive e-auctions are specifically earmarked for the non-power sector. Notably, coal receivers in the auction other than Sponge Iron manufacturers were comprised of Aluminium, Distilleries, Paper & Pulp, Lime and industries associated with Steel business.

Jindal Steel & Power, emerged as the largest coal receiver in the auction with purchases of 102,650 MT coal. The company had its limited coal sourcing to low CV material, acquiring G16 and G17 coal grades.

Shree Nakoda Ispat (44,000 MT), Prakash Industries (36,450 MT), Shiv Shakti Steel (30,000 MT) and Monnet Ispat and Energy (28,550 MT), were the other major coal receiver, all belonging to the Sponge Iron sector. Hindalco Industry with 27,850 MT was the sole receiver in Aluminium sector.