India: Bids for higher-grade coal fall by about INR 500/t in latest ECL auction

• Sales volume nearly doubles between 4, 12 Nov auctions
  
  
• Sales of higher-grade G4 drive sharp increase in volume
  
  

Eastern Coalfields Limited (ECL) conducted two auctions on 4 and 12 November 2024, which saw significant differences in performance. While the 12 November auction recorded a notable increase in sales volume, it saw bids fall sharply by about INR 500/t compared to the previous auction.

Presented below is BigMint's analysis of the recently conducted auctions.

Key observations

Sales volume nearly doubles: On 4 November, 95,850 tonnes (t) of coal were sold across grades such as G10, G4, and G5. Meanwhile, the 12 November auction saw 188,800 t booked, nearly double the sales volume of the previous auction. The spike was driven by sales of the premium G4 grade (169,800 t), which accounted for 89.9% of the total volume, and reflects a preference for high-grade coal.

Bid prices fall: G4 emerged as the star of the 12 November auction, fetching an average price of INR 5,098/t. However, bids corrected by INR 474/t against the 4 November auction, where the average bid price of the grade was INR 5,572/t.

Grade applications

• G10 is commonly used in power generation due to its affordability and calorific value.
  
  
• G4, being a superior grade with high calorific value and low ash content, is vital for steel manufacturing in blast furnaces and cement production, ensuring cost efficiency and reduced emissions. Additionally, it has niche applications in the ferro alloy and chemical manufacturing industries. The wide use of this grade explains its strong demand, making it the most traded grade in November.
  
  

Location dynamics: Sonepur Bazari led the 12 November auction with 129,650 t, contributing 68.7% to the total quantity, while Rajmahal topped the 4 November auction with 44,800 t.