India’s Coal E-Auction Prices Set To Rise As World’s Top Supplier Halts Exports

Procuring coal from e-auctions is expected to turn more costlier after the world's largest exporter of the fossil fuel restricted shipments.

Indonesia earlier this month had paused exports of thermal coal to secure dwindling supplies for its power plants. The month-long halt, its Energy and Mineral Resources Ministry said, was needed to prevent shutdowns at about 20 power plants in Java, Madura, Bali and other regions.

While the top supplier partly eased curbs by Jan. 20, a Reuters report citing Kpler data said Indonesia in January was expected to export 43% less than in December, and it would be the weakest month in five years. The commodity consultants sees only Australia's shipments to increase over the previous month in January, while other major exporters such as Russia and South Africa may witness a decline.

Indonesia, Coal Mint data showed, exported 315 million tonnes of the solid fuel in 2021. To be sure, Bloomberg citing Indonesia's Energy and Mineral Resources Ministry said the top exporter fully lifted the ban effective Feb. 1.

The halt, according to Bloomberg data, however, has sent the global benchmark coal prices surging to the highest in a year, as well as limited imports into India.

Inbound coal shipments into the country, according Coal Mint, fell from 4.36 million tonnes in December to 1.02 million tonnes in January 2022.

E-auction prices are also likely to follow a trend similar to international prices, said Jayanta Roy, senior vice president-research at ICRA Ltd. Also, private domestic consumer importing coal will have to bear the brunt of higher global coal prices.

While Roy doesn't see an increase in the prices of coal linkages as it's been tied to priority sectors like power generation, he expects the demand-supply situation to restore by February once the backlog is cleared.