Coal e-auction prices climbing up despite huge stock

Source: The Hitavada      Date: 18 Oct 2017 10:17:57


By Niraj Chinchkhede,

The coal trade appears to have been passing through a typical phase where producers are sitting on huge stocks but consumers are facing scarcity and the prices of the commodity is flying high - especially for the non-power generators.

Experts in the coal trade attributed the phenomenon to increased load on thermal power stations and the recent decision of the Government to relax norms on imported coal. In the wake of drop in power generated by hydro and wind power plants, the thermal power stations are expected to fulfill the country’s demand because of which are in need of additional supply of coal.

Sources in the coal trade said, it is because of lack of loading facilities, the coal lying in the yards is not reaching to the consumers and thus the demand and supply gap is widening.

While lack of availability of coal is proving big hurdle for the power generators, it is also troubling the other category of consumers who are shelling out extra bucks for the black gold. The recent rates of coal auction clearly reflects the market sentiments as the bidders were seen quoting as high as Rs 5,500 tonnes (inclusive of all taxes) for the commodity.

Market observes told The Hitavada that the recent price range of coal in the e-auction done by the Western Coalfields Limited (WCL) is all-time high. “Ideally, the coal prices should be 15-20 per cent less taking into consideration the claims of the coal producers that sufficient coal is available with them. But things are bit different on the ground level,” said Rajendra Bansal, General Secretary of Central India Coal dealers Association.

He said that the demand for coal has shot up dramatically in recent past.
“With the demand from thermal power stations is going up, the coal producers are giving them top priority and the non-power consumers are facing scarcity,” he said.

Rajeev Ranjan Mishra, Chairman and Managing Director of Western Coalfields Limited (WCL) on Tuesday said, WCL has enough stock of coal. “As of now, we have 6.884 million tonnes of coal available with us and we are ready to meet the demand,” he said.

Mishra also said that the company had managed to the supply over 27 racks of coal per day recently. “We are expecting to achieve further growth in coal supply as monsoon has come to an end,” he said.

WCL supplies about 75 per cent of the coal to power generators while 25 per cent of the quantity goes to other consumers through e-auction and notified rates. The company does e-auction on couple of occasions in every month inviting on-line bids from the buyers.

A specific quantity of coal is earmarked for the e-auction. but the coal producer seldom manages to sell the entire quantity of coal set aside for auction.
Interestingly, in the recent e-auction the bidders not only bought the entire 3 lakh tonnes of coal set aside, but they bought it at highest ever price.