Coal In­dia Mopup Via E-Auc­tion Rises

In De­cem­ber quar­ter, av­er­age re­al­i­sa­tions from e-auc­tion rose to .₹ 1,546/t

The Economic Times - - Economy: Macro, Micro & More - De­b­joy.Sen­gupta@ times­

Kolkata: Federal mo­nop­oly Coal In­dia’s av­er­age e-auc­tion prices for the solid fuel have risen af­ter about 12 months, re­flect­ing a hard­en­ing global trend in the costs of the energy source.

In the De­cem­ber quar­ter, av­er­age re­al­i­sa­tions from e-auc­tion rose to .₹ 1,546 per tonne, 17% higher than the pre­ced­ing three months, re­vers­ing a se­ries of de­clines that had be­gun in April 2015. An­a­lysts ex­pect prices to re­main firm and aid Coal In­dia im­prove its fi­nan­cial per­for­mance be­cause of out­put mod­er­a­tion by large re­gional ex­porter In­done­sia and re­vival of de­mand from smoke­stack in­dus­tries in China, which had ini­tially trig­gered global de­clines by shut­ting some coal-fired power plants.

Coal im­porter SPIML said in­ter­na­tional prices are ex­pected to stay sta­ble for the next few months: Im­ports from In­done­sia into In­dia and con­tin­ued de­mand from China – key at­tributes in re­vers­ing price de­clines now – will likely con­tinue, H Sethi, as­so­ciate di­rec­tor at SPIML, told ET.

Coal In­dia, based in Kolkata, is one of the world’s few min­ers of the fos­sil fuel that re­turns at a rate higher than its weighted av­er­age cost of cap­i­tal, ac­cord­ing to Bloomberg. Through a raft of op­er­at­ing com- Burn­ing Bright Av­er­age e-auc­tion coal prices fetched by Coal In­dia (` per tonne)

₹ ₹ ₹ ₹ ₹ ₹ ₹ pa­nies grouped by the ge­og­ra­phy where the mo­nop­oly mines, Coal In­dia raised about 7% of the world’s out­put in 2015, Bloomberg data showed.

Since April 2015, av­er­age prices fetched by Coal In­dia from lo­cal auc­tions started to fall and in the sub­se­quent12 months, prices dipped by about 39% from .₹ 2,184 per ton in the quar­ter ended June 2015 to .₹ 1,337 per ton dur­ing the quar­ter ended Septem­ber 2016.

“Rea­sons for the fall in­cluded ad­e­quate stocks at power plants and non-power coal con­sumers, such as ce­ment and fer­tilis­ers. In­ter­na­tional prices were also re­flected in the auc­tion prices, which were on the de­cline prior to July last year,” said a se­nior Coal In­dia ex­ec­u­tive.

An an­a­lyst said: “Prices have in­creased as im­ported coal prices touched a peak in Novem­ber and it makes sense for coal con­sumers to switch to do­mes­tic sources.”

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