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Coal and Power Minister Piyush Goyal has withdrawn the curbs he had imposed on open market sales by Coal India Ltd.
In July, the Minister had asked CIL to restrict e-auction sales at 25 million tonnes (mt) in 2014-15 (58 mt in 2013-14) to ensure higher supplies to the power sector. The decision backfired as the company’s inventories went up while profit declined.
To reverse the trend, the Government lifted the curbs in December.
Supply glut Data available with the Coal Ministry suggests that the miner had increased the e-auction offering by over three times from 2.5 mt in November to 8.4 mt in December.
This was 50 per cent more coal than the company offered for e-auction in December 2013.
The sudden rise in offering resulted in a supply glut in the market, as nearly 30 per cent remained unsold.
This, coupled with weak demand from local industries as well as falling global commodity prices, brought down the per tonne realisation.
In November, CIL sold 2.5 mt of coal through this platform at nearly 92 per cent higher than the notified price (around ₹1,400 a tonne, including pithead taxes and duties).
In comparison, 6.1 mt of coal was sold in the open market in December, at 51 per cent higher than the notified price.
The low realisation failed to bring any major surge in CIL’s profit.
At best, it helped the miner to restrict the decline in profit at 16 per cent in the December quarter. Profit had dropped 28 per cent in the July-September period.
On the brighter side, the sudden burst of offerings saw CIL’s total open market sales reaching close to 28 mt in the first nine months this fiscal. This is higher than the limit set by Goyal’s July order at 25 mt .
Better outlook In January, the miner had offered 5.7 mt for e-auction. The lower offering (compared to December) is likely to help extract better price.
The prospects of higher realisation may improve in February as South African steam coal prices surged by 10 per cent over the last one week. The Indonesian coal prices are also holding on to the January levels.
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