India: Washed coal prices rise as ROM costs strengthen

• Higher auction premiums raise washeries’ replacement costs
• Increase in sponge iron prices supports washed coal

Indian washed coal prices continued to strengthen in the assessment week ended 2 September 2026 as rising ROM costs and constrained production tightened availability. BigMint assessed 38-39% FC (5,000 GCV) washed coal FOR Raipur at INR 8,100/t on 2 September 2026, up INR 500/t w-o-w. Washeries remained reluctant to accept fresh orders as slower production limited their ability to meet demand. Rising ROM costs further lifted replacement costs and supported higher offers, despite cautious downstream buying.

Tight ROM supply keeps washeries under pressure

ROM availability remained the key constraint for washeries. Higher domestic coal prices and continued supply limitations increased feedstock costs, while slower production restricted the volumes available for sale. Sellers therefore remained firm and, in several cases, avoided taking fresh orders as they were unable to commit to additional quantities.

Coal India’s e-auction realisations also indicated firmer replacement economics. CIL sold coal at an average 59% premium over notified prices through e-auctions in August, compared with 46% during April-August, while SECL recorded an allocation premium of 81% in August. The higher auction premiums added to the cost pressure faced by downstream users.

Domestic coal prices move higher

Domestic coal prices strengthened further during the week. 5,000 GCV coal ex-Bilaspur increased INR 500/t w-o-w to INR 7,900/t on 1 September, while 4,500 GCV coal rose INR 350/t to INR 5,800/t.

The continued increase in domestic coal prices raised replacement costs for washeries and contributed to firmer washed coal offers. With ROM availability remaining tight, producers faced higher input costs even as finished coal demand remained selective.

Sponge iron prices provide additional support

Sponge iron prices also moved higher, supporting the increase in washed coal prices. PDRI ex-Raipur increased INR 250/t w-o-w to INR 29,050/t on 2 September 2026.

Higher coal costs continued to put pressure on sponge iron producers, while firming finished steel prices provided some support to procurement economics. However, buyers remained cautious and largely focused on immediate requirements.

For washed coal producers, the combination of higher ROM prices, limited production and firm sponge iron prices continued to support the market. The immediate supply constraint appeared more important than demand strength, with sellers prioritising existing commitments and limiting fresh bookings.