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India: Bid premium in CIL's spot e-auctions drop to 179% in Dec'22
Non Coking
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5 Jan 2023, 18:17 IST
Steel Mint Insights

Bid premiums in spot auctions conducted by Coal India Ltd. (CIL) fell in December 2022 after remaining stable during October-November.

Bid premium over the notified price fell to 179% in December which was around 240% in October-November. CIL offered 5.9 mnt of coal in December of which 99% was booked at INR 2,696 crore. Notably, an almost similar quantity was offered in November.

This indicates a m-o-m fall in bid premium which was the result of lower demand for coal amid slowdown in industrial activity.

Meanwhile, there has been a steep correction in bid premiums post summer when they had peaked to 425% in May. This decline is the result of augmented coal supply by CIL. Coal supply via spot e-auction in Q1FY23 was 10 mnt, which went up to 12 mnt in Q2 FY23 and 15 mnt in Q3 FY23.

However, the premium over the notified price in December 2021 was 141%, indicating that bid prices are still higher compared to last year.

Subsidiary-wise analysis

In a rare occurrence, all the eight subsidiaries of CIL conducted auctions in December. However, the quantity offered was rangebound as the total offering by South Eastern Coalfields Limited reduced significantly.

Notably, all the subsidiaries of CIL saw a drop in bid premiums compared to previous auctions. However, the steepest fall was recorded from CIL's top coal-producing subsidiary, Mahanadi Coalfields Ltd, with the premium over notified prices falling by 144% in December as against 300% in November.

ECL's first ever cluster-based auction

Eastern Coalfields Ltd (ECL) conducted the first-ever Single Window Mode Agnostic i.e cluster-based auction for 250,000 t in December. As per the scheme, instead of coal offerings from individual mines or collieries, the coal companies would now float quantities for auction as a cluster of mines or collieries.

The Single Window Mode Agnostic auction received bid premium of 218%, while the quantity booked was 76% of the total volume on offer.

In addition, ECL also offered 320,000 t via regular spot auctions (mine-wise) in December. However, these auctions fetched a bid premium of 199% and the entire quantity was booked.

In fact, the new cluster-based auction fetched a higher bid premium because bidders placed higher bids to procure coal from desired mines and via desired mode of transport in a cluster.

Outlook

In the short term, it is anticipated that bid prices are likely to fall in the upcoming e-auctions as demand is expected to remain limited, while there is no possibility of supply constraints.

 

5 Jan 2023, 18:17 IST

 

 

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