Coal India discovers 150% premium rates in FY 2021-22 auctions

India's state-run Coal India offered 35.9 million mt of coal to buyers through spot auctions in fiscal year 2021-22 (April-March) and prices were discovered at 150% over the company's standard rates, the ministry of coal said in the monthly summary for March to the country's cabinet secretary April 11.

The coal ministry's monthly summary, reviewed by S&P Global Commodity Insights, stated that as much as 7.89 million mt of coal was allocated by Coal India for the auctions in March itself, when it discovered prices which were 290% over the company's standard notified coal rates.

In FY 2020-21, 42.51 million mt coal was offered through similar auctions by Coal India, when it discovered rates at 25% premium over the company's notified prices.

The surge in price discoveries in the recent auctions coincides with rising import prices due to supply tightness created by the Russia-Ukraine conflict.

In March, the price of Kalimantan 4,200 kcal/kg GAR averaged $111.237/mt FOB, according to data from S&P Global. Coal India's notified price of similar grade of coal ranges between Rupee 965-1,155/mt ($12.67-$15.16/mt).

Thermal coal imports by power utilities in India fell 43% on the year to 24.16 million mt during April 2021-February 2022, according to the latest available data from the ministry.

India produced 777.33 million mt coal in FY 2021-22, of which 622.65 million mt was produced by state-run Coal India. The company plans to produce 700 mill mt in FY 2022-23, Union coal minister Pralhad Joshi informed the parliament on April 6. Most of the coal produced by Coal India is supplied to consumers at standard notified prices under long-term contracts.

The company used to allot around 20% of its output in sector-specific auctions meant for power and non-power sectors such as cement and aluminum.

However, in February, the country's cabinet committee on economic affairs chaired by Prime Minister Narendra Modi allowed the company to conduct single-window auctions for all sectors.