Coal news and updates

CIL Oct e-auction offering drops sharp 42% m-o-m

India Coal Market Watch

 November 24: There was a sharp 42.07% month-on-month drop in Coal India Limited’s overall offering in spot e-auction to 6.69 million tons (mt) in October 2015 from 11.55 mt offered in September, according to provisional data available with ICMW.

 The total offering in October was, however, still higher than around 5.86 mt offered in August and only 1.187 mt offered in October 2014.

 The average realisations in October e-auction of various CIL subsidiaries dropped marginally to 44.12% over the notified prices from 44.73% reported in September.

 The average realisations showed a flat trend amid continued softness in imported coal prices and healthy growth in domestic production, market sources said. This, however, was still higher than the average realisation of 24.76% recorded in August.

 The allotment in October was slightly up at 5.27 mt in October from 4.28 mt in September and 1.186 mt allotted in October 2014. Incidentally, the offered quantity in September was the highest in a month during the past more than 40 months and also perhaps since e-auction was started in 2006-07.

 The October figures showed an increase in the percentage of allocation which stood at 78.77% of the offered quantity, significantly higher than 37% recorded for the previous month. In absolute terms, the allotment was up by about 1 mt.

 The sharp decline in the offered quantity in October was mainly because of the fact that CIL had offered around 5 mt coal separately to power sector consumers as per the directive of the Ministry of Coal, according to sources.

 With this, the company has offered a total of 48.92 mt of coal for allotment through e-auction during the first seven months (April-October) of 2015-16, up 143.5% compared to only 20.09 mt offered during the same period of 2014-15.

 Similarly, the allotted quantity jumped by 68.4% to 32.31 mt from a low of 19.19 mt during the first seven months of 2014-15.

 In fact, 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.

 Meanwhile, pressures from soft global prices and the weak economic situation that is affecting realisations of all coal-consuming sectors brought down CIL’s gains in realisations during the seven months of the current financial year.

 The total realisations from allotment through e-auction fell to 38.74% above the notified price during the seven months of 2015-16 as compared to a high of 68.64% during the corresponding period of 2014-15.

 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 seven months of 2015-16 and full year of 2014-15, 2013-14 and 2012-13:

# Figures may not tally due to revision in data made by CIL for prior period.