Coal news and updates

Coal India’s April e-auction offering increases 54.5% y-o-y

Coal offering by Coal India Ltd (CIL) for sale through e-auction showed a sharp increase of 54.5% year-on-year (y-o-y) in April 2016, according to provisional data available with ICMW.

Total offering of coal stood at 10.09 million tons (mt) in April 2016, compared to 6.53 mt recorded for the same month last year.
 
However, allotment of the fuel was low, and showed a marginal drop of 1.8% to 5.62 mt in April 2016, compared to 5.72 mt in April 2015, the data showed.

On a month-on-month (m-o-m) basis, both the offerings and allotment of coal were down by 14.4% and 11.9%, respectively. In March 2016, total offering was 11.79 mt while allotment was 6.38 mt.

The April 2016 data indicates low consumer appetite for e-auction coal, mainly due to the substantial growth in domestic coal availability through linkages, availability of cheap imports, and low demand for the end-product of the consuming sectors.

Accordingly, 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 April 2016 was 22.17%, much lower than 44.18% recorded for the same month last year. This was also lower than 30.60% achieved in March 2016.

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 surplus production.

Earlier, riding on a substantial growth in coal offering for sale through e-auction, allotment of the fuel showed a sharp increase of 26.98% in 2015-16, even as a significant volume of offering remained unsold due to lack of appetite in the market.

Total offering of coal increased by a whopping 76.55% to 88.58 mt in 2015-16, compared to 50.17 mt offered in 2014-15. Total allotment was up at 57.41 mt in FY16, compared to 45.21 a year ago, the data showed.

The increasing trend was in sync with CIL’s earlier announcement of offering more coal through e-auction following a surge in production since late 2015.

However, the lower appetite from consuming segments resulted in a drop in average realisation above the notified price during the year under review. The premium earned in the auction over the notified price in 2015-16 was 33.74%, almost half of 64.46% recorded for the previous year.

Commenting on the trend, CIL sources said that the lower premium in 2015-16 resulted from both an increase in offering and a drop in demand.

The following table contains the quantity of coal (provisional data) allotted by CIL via the spot e-auction route in 2016-17, 2015-16 and 2014-15:
 

*Excluding 5 mt of offering for special e-auction to power sector
Nb: Yearly figures may not tally due to rounding off