More Stories

Informist, Wednesday, Jun. 4, 2025

 

--Coal India official: Expect e-auction prices to moderate in FY26

--Coal India official: See premium at e-auctions in FY26 at 30-40%

--Coal India official: Poor demand, captive mining impacting e-auction rates

--Coal India official: Tepid global coal prices hurting e-auction prices

 

By Avishek Rakshit

 

KOLKATA – Coal India Ltd. may see premium earned at e-auctions moderate to 30-40% in the current financial year on account of tepid domestic demand, weak global coal prices, and rise in output of captive producers in the power and steel sector, company officials told Informist. In Jan-Mar, the company earned a premium of 43% in the e-auctions and in Oct-Dec, the premium was 55%, officials at the world's largest coal miner said. In the Apr-Jun quarter of FY25, the premium was 46%, and in Sept-Oct, the e-auction premium was 50%.

 

The officials said when coal prices rise globally, prices at the company's e-auctions rise as well, and vice versa. Last month, prices of Indonesian thermal coal, which is the preferred choice of Indian importers, fell to a four-year low of $48.4 a tonne. Availability of coal in the domestic market is another factor that affects prices. If supply is low, buyers bid aggressively at the auctions, and when supply is high, competition among the buyers goes down, thereby pulling down prices. According to officials from the coal and power sector, global coal prices may fall further in 2025-26 (Apr-Mar).

 

"Eventually, how prices fare will also depend on how the regulated sector (state-owned power plants) and the non-regulated sector (private sector companies in the steel, cement, ferro-alloys sectors) source their coal from different players in the market," a Coal India official said.

 

Apart from Coal India, Singareni Collieries Co. Ltd., Odisha Coal and Power Ltd., and others also produce and sell coal. Companies like NTPC Ltd., Steel Authority of India Ltd., Tata Steel Ltd., JSW Steel Ltd., and others also produce coal from captive mines for their own use.

 

From FY15 to FY20, a total of 24 coal mines were auctioned under captive auctions, and since FY20 till date, a total of 125 coal mines, with a combined annual production capacity of 273.1 million tonnes, have been auctioned. "A portion of consumers in the auctions are expected to step up their own captive production or procure coal from other means," a Coal India official said.

 

In May, coal production from commercial and captive mines in the country surged by 24.6% on year to 16.4 million tonnes. Dispatches to the plants also increased by 13.8% on year to 17.5 million tonnes. At the same time, Coal India's sales volume declined by nearly 8% on year to 64 million tonnes during the month. Major companies in the power, steel, and cement sectors own captive mines but also bid at Coal India's e-auctions.

 

The cost of mining the fossil fuel is the same for that sold through fuel supply agreements and at e-auctions, but coal is sold at notified prices through supply agreements and at higher than notified prices at e-auctions. As such, the premium at the e-auctions directly adds up to the company's profits.

 

"Coal demand is seasonal and it keeps varying but demand is a big determinant of the premium in the a-auctions and it will be strong when coal demand and global prices is strong," a Coal India official said. In FY22 and FY23, when the country faced coal scarcity and global coal prices sky-rocketed, premiums at Coal India's e-auctions shot up to 250% and 300%, respectively. However, prices at the e-auctions have been on a decline ever since.

 

According to Coal India officials, on one hand, the Maharatna company has enough coal stocks, and on the other hand, power plants are also laden with over 60 million tonnes of coal inventory against 53.4 million tonnes at April-end. "Demand conditions continued to remain tepid during the summers and now monsoons are early as well. With so many factors combined, coal demand could not build up effectively," one of the company officials said.

 

In April, which marks the beginning of the summer season, Coal India's sales volume declined by over 1% on year to 63.4 million tonnes, and in May, which is considered as the peak summer season, coal sales fell as well as elucidated earlier.

 

According to latest data from the Central Electricity Authority of India, electricity generation in May declined by 8.2% on year to 133.1 billion kilowatt hour. Thermal power generation fell by 10.7% on year to 114.1 billion kilowatt hour in May, reflecting tepid power demand conditions.

 

At 1445 IST, shares of Coal India were up 0.3% at INR 394 on the National Stock Exchange.  End

 

US$1 = INR 85.96

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.