Coal news and updates

CIL Dec e-auction allotment rises 3.17% m-o-m

A sharp increase in coal offering for sale through e-auction resulted in higher allotment of the fuel in December as compared to November, but the realisation fell sharply to 23.01% above the notified price from 32.37% in the previous month, according to provisional data available with ICMW.

Total offering in December increased by 10.57% to 7.53 million tons (mt) from 6.81 mt in November and the allotment increased by 3.17% to 4.55 mt from 4.41 mt

The total offering and allotment in December 2014 stood at 7.23 mt and 6.15 mt respectively

The higher offering was the result of increased availability of coal with the company, sources said.

However, an increased offering in the e-auctions at a time when international coal prices are bearish and there is no additional demand for coal from organised players resulted in low realisations for the company.

In fact, the premium earned in the auction over the notified price in December was the lowest during the current financial year. The premium may remain under pressure in the coming months as the company is likely to offer higher volumes for sale through e-auction in the last quarter of 2015-16 on the back of increased production.

With this, the company has offered a total of 58.26 mt (excluding the 5 mt of offerings for the power sector) through e-auction during the first nine months (April-December) of 2015-16, up 93.88% compared to 30.05 mt offered during the same period of 2014-15.

Similarly, the allotted quantity jumped by 47.42% to 36.52 mt during the first nine months of 2015-16, compared to 27.86 mt allotted during the same period last year.

The high yearly growth in offering and allotment was due to the low base effect. The offering and allotment during the first six months of 2014-15 stood lower because the Ministry of Coal had directed the company to offer less coal through the route in order to supply higher quantity of coal to power sector consumers. The low quantity offered, however, increased the premium earned over the notified price to as high as 91% in November 2014.

For the first nine months of 2015-16, average realisations over the notified price stood at 36.26% as compared to a high of 67.46% during the same period last year.

The increased offering and allotment resulted in lower realisation of premium, which might affect CIL’s profitability even as consumers who bought the coal through e-auction stand to benefit as they had to pay comparatively low premium as against the previous year, industry sources said.

The following table contains the quantity of coal (provisional data) allotted by CIL via the spot e-auction route during the first eight months of 2015-16 and full year of 2014-15, 2013-14 and 2012-13:
 

*Excluding 5 mt of offering for special e-auction to power sector