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Coal India Ltd expects to sell nearly 80-90 million tonnes of coal through its electronic auction platform this year. At an average premium of about 300% of the listed price. This was driven by higher demand and rising international coal prices. although in terms of quantity It might be slightly lower than the total sales from the e-auction listed last year. But expect recognition to be much higher due to higher premiums than stated prices.
State-owned miners earn nearly ₹4,400-4,500 per tonne from sales via e-auction routes this year. Compared to the average revenue of around ₹1,400-1,500 per tonne via the FSA (fuel supply agreement) route, it received a premium of approximately 30 percent from the quoted price (or almost JPY 1570 per tonne) in the same period last year.
better profit
It is worth noting that higher sales through the auction route will help the company earn better profits. This is because the average price recognition in electronic auctions is often better than selling through the FSA route.
Pramod Agarwal, president and managing director of CIL, said e-auction sales could drop if demand for electricity increases significantly, however, as production begins to recover in the coming months. And the declining demand from the forecasted energy sector going forward will drive the volume of electronic auctions higher.
“The electronic auction price in the first quarter was about 4,340 yen and we sold almost 20 million tons. I don’t have a number right now. How much did we bid in Q2? But I think this trend of about 20 to 25 million tons will continue throughout the year. And we will end the year with about 80 million to 90 million tons of electronic auction coal. But this depends on the increased demand for energy. If the demand for energy increases dramatically Our ability to auction electronically will fall to that level, prices are still very high and in some cases we have received about 4,500 or 300% of the premium, so about this period will remain if not increased. more But at least this range will be held for electronic auction prices as well,” Agarwal said in a recent analyst transcript.
The demand from the energy sector is moderate.
CIL is authorized to bid for up to 20 percent of coal production through electronic auctions. and typically sell for almost 16-18% of the total volume. due to the need to focus on the energy sector Whenever the demand from the energy sector increases Sales through electronic auction platforms will decrease.
However, Agarwal hopes that the volume of electronic auctions will increase in the coming months, with energy sector demand falling on the usual trend. Energy demand declined in October, November and December, and as a result coal demand also declined. The average stock of power plants also improved to 28-29 tonnes compared to the same period last year, which was around 10-12 tonnes.
“This additional 16 million tonnes will give them a lot of leverage. And this will also help us in providing coal to the non-energy sector. and is unlikely to happen in the next few days. Maybe the stock will go down. But from October onwards or after September 20, the power plant’s stock is unlikely to decline. that’s what we saw But no one was able to say or confirm it. Because it depends a lot on the monsoon and temperature conditions. that’s the situation Therefore, the volume of electronic auctions will increase in the coming months,” he said.
Published September 19, 2022
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