14 Mar 2022

Spot Coal Prices Hit Record on High Demand, Hoarding

14 Mar 2022  by   
India local coal prices discovered under the spot e-auctions are at a record high, close to international levels, due to increased demand from power plants ahead of summer and suspected hoarding by traders in anticipation of a shortage due to the Russia-Ukraine war.

Power producers said this would substantially raise power tariffs, particularly the spot prices, while coal companies said the coal being bought is meant for merchant plants, which sell power on the exchange and account for only a small portion of India's total electricity generation.

According to people in the know, in spot auctions held by Coal India's Northern Coalfields, coal from mines like Nigahi and Khadia got sold at ₹13,400 per tonne for mid-level grades of G7 and G8. The minimum price discovered from the e-auction is about ₹5,900 per tonne, for reject coal from the Bina mine.

The landed cost of international coal is also at a record high of nearly ₹15,000 per tonne. Coal India's notified price for the highest grade of coal G1 coal is around ₹8,500 per tonne and G8 around ₹2,600 per tonne. NCL offered 520,000 tonnes of coal under the e-auction which was completely booked.

"The prices of e-auction for coal have gone very high and we suspect the coal traders are hoarding ahead of summers and as imported coal is likely to get costlier in the absence of Russian coal. But e-auction is a small portion of the produce. So, there will be no major impact," a government official said.

However, power companies said the high prices reflect what the power developers would be paying once the recently approved single window e-auctions kick-in. The average electricity price on the Indian Energy Exchange for March 12 rose to ₹7.80 per unit from ₹4-4.50 a fortnight ago. "For power projects with long-term PPAs, the option to meet deficit of linkage for the power sector was the special forward e-auction With it no longer available they have no option but to get the deficit quantity fro ..

The government official said Coal India had committed to supply full coal to the fuel supply agreement holders against PPAs, which means discoms are fully insulated from high coal auction prices.

The CCEA had on February 26 approved a single spot e-auction window by coal firms for all consumers aiming at uniform market-discovered price for the same grade of coal.


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