Coal news and updates

E-auction volumes cut pushes consumers to hike imports

September 3: The cut in coal e-auction volumes, as directed by the government, is pushing small and medium sector consumers to increase their import volumes while procurement from traders is being given the slip, industry sources said.

“Majority of the unmet demand is going to be sourced through imports. Not many, except those who consume lesser quantities, would be interested in procuring the same from domestic traders,” an industry source told ICMW.

“People may buy a few odd lots from the traders, but the bulk purchase would be shifted to imports, so long as international prices remain soft,” he said.

Echoing the view, an official with Super Smelters, a Sai Group company, said the company would increase its imports to 50% of its requirement from the earlier 35%. The company, which manufactures steel and stainless steel, TMT bars, round rods, steel billets as well as sponge iron, consumes around 432,000 tons of coal per annum.

“We import RBI and RB2 grade coal from South Africa. We may also procure from Indonesia, but we have no plans to get it from traders,” the official said.

“Importing, at this point, is a better option,” said another official from a cement manufacturer.  “We expect traders’ prices to shoot up in the coming months following the cut in e-auction volumes,” he added.

The government has asked Coal India Ltd (CIL), which sold 58 million tons (mt) of coal through e-auction in 2013-14, to reduce the quantity to 25 mt this year. The move is aimed to increase supply of domestic coal to the coal-starved power sector.