The country's largest coal producer, Coal India Ltd (CIL), has managed to pull the power plants out of criticality but that came at the expense of the non-power sector whose supplies were put on a tight leash in this period.
Post-monsoon, the miner registered record high dispatches of 56.66 million tonnes (mn t) in Oct'21. In absolute terms, supply to the non-power sector also saw an improvement of 4% m-o-m to 8.33 mn t in Oct'21 against 8.04 mn t in Sept'21.
However, its share in the overall coal supply volume in Oct'21 came down to 15%, from 18% in Sept'21 as the bulk was diverted to the power plants.
It is important to note that CIL has maintained healthy coal supply to the non-power sector this fiscal by registering a growth of 2% y-o-y to 72.98 mn t during Apr-Oct'21.
The brakes on supply to the non-power sector were applied since Aug'21 when stockpiles at the power plants started depleting at a faster rate due to the drastic surge in electricity demand.
Notably, coal supplies fell 21% y-o-y to 26.29 mn t during Aug-Oct'21, compared to the growth of 22% noted in the first four months of Apr-Jul'21.
Non-power sector remain competitive in auction sales
Because of the lower stock position at power plants, CIL had curtailed coal offerings via the auction route. In fact, no sales were held under the exclusive scheme in Oct'21 after CIL had temporarily suspended auction for the non-power sector.
Consequently, greater appetite was seen from the end-user industry when these auctions resumed in Nov'21 as was evident from Mahanadi Coalfield Ltd.'s latest exclusive auction which fetched a premium of 86% over the notified price- which is the highest in this fiscal.
On the other hand, dwindling interest was seen from the power producers with gradual build-up in inventory levels.
Incidentally, South Eastern Coalfields Ltd.'s coal sales via the special forward auction meant for power producers saw a sharp decline in bid premiums from 174% in Oct'21 to 64% in Nov'21.
Although inventory levels at power plants are improving steadily, these are still far from the normative stock levels required to be maintained. As a result, supplies to the non-power sector will take some more time to normalise.