Coal news and updates

CIL expects revival in e-auction realisations post-monsoons

September 3: Coal India Ltd (CIL) expects a sharp improvement in realisations in e-auction after the monsoon, a senior official told ICMW.

"The realisations were sharply down in July to around 30% over the notified price as compared to 45-48% over the notified price during the first three months of 2013-14. But, hopefully, it will improve after the monsoon when demand for coal from consumers like cement and sponge iron sectors improve," the official said.

"There could have been multiple reasons for fall in realisations in the e-auction, including a soft trend in the international coal markets and a low demand from domestic consumers because of the monsoon," he said.

"The first reason for low demand is the monsoon. There are lot of non-FSA users who do not take coal during the monsoon. The second reason is low buying from the sponge iron sector because a number of them have closed down because of higher cost of iron ore and low realisations from steel makers," the official said.

The official felt, like providing domestic coal to sponge iron makers at a notified price, the government should also consider providing iron ore to them at a notified price to increase their profitability.

"I feel, just as they get coal at a notified price, they should also receive iron ore at a notified price. Everybody is focusing on coal, but no one is bothered about the prices of iron ore. Today miners, including NMDC, are exporting huge quantities of iron ore. Instead of exports if that quantity is given to the sponge iron makers at a notified price, it would help them because currently iron ore prices are high because of exports," the official said.

If they get iron ore also at notified price, they will be in a position to produce sponge iron at a low price and sell the same to steel makers at a low price. This will lead to overall increase in production and that too at a low price which, in turn, will benefit the coal industry, the official added.