Coal news and updates

CIL’s Feb e-auction allotment down 11.5% m-o-m

Despite a modest increase in coal offering for sale through e-auction by Coal India Ltd (CIL), allotment of the fuel showed a sharp decline of 11.54% in February 2016, reflecting poor appetite of the consuming industries for the dry fuel, according to provisional data available with ICMW.

Total offering of coal increased by 4.64% to 9.47 million tons (mt) in February 2016, compared to 9.05 mt offered in January 2016. Total allotment dropped to 4.68 mt in February from 5.285 mt in the previous month.

The total offering and allotment in February 2015 stood at 7.202 mt and 6.187 mt, respectively.

Along with a decline in allotment, the average realisation above the notified price was also down during the month under review. The premium earned in the auction over the notified price in February 2016 was 23.91%, lower than 26.67% achieved in January 2016. This was also sharply lower than 59.31% recorded for the same month last year (February 2015).

The higher offering in February 2016 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, they said.

The premium may remain under pressure in the coming months as the company is likely to offer higher volumes for sale through e-auction on the back of increased production.

With this, the company has offered a total of 76.78 mt (excluding the 5 mt of offerings for the power sector) through e-auction during the first 11 months (April-February) of 2015-16, up 76.59% compared to 43.48 mt offered during the same period of 2014-15.

Similarly, the allotted quantity jumped by 29.26% to 51.02 mt during the first 11 months of 2015-16, compared to 39.47 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 quantities to power sector consumers. The low quantity offered, however, increased the premium earned over the notified price to as high as 116% in October and 91% in November 2014.

For the first 11 months of 2015-16, average realisations over the notified price stood at 34.07% as compared to a high of 64.46% 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 11 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