Indian state-owned Coal India Limited (CIL) could sell 359,000 mt of coal linkages to cement sector companies in the first two days of the second round of auctions of coal linkages.
A total of 1.18 million mt of coal was offered in an e-auction for cement companies on Tuesday and Wednesday but only 359,000 mt was bid by the consumers, a CIL official said Thursday.
While the official agreed that the response from the cement sector was lukewarm, he said the auction would continue until July 1 and response may get better for the rest of the days.
CIL has put up 2.15 million mt of coal linkages for the cement sector under the e-auction, which began June 28.
However, a Mumbai-based market source said that almost all cement companies are now using petcoke, which is much more cost effective than coal. Since the monsoon season has started, construction activity has slowed down and demand for cement has weakened too, he added.
CIL has started auctioning coal linkages as part of a government directive to hold auctions in a transparent and consumer friendly manner for unregulated sectors such as sponge iron, cement, steel, aluminium and captive power producers.
In the first round, CIL sold 2.05 million mt of coal linkages against the offered quantity of 3.78 million mt to sponge iron sector. A total of 23.75 million mt of coal has been put on the block for the fiscal year 2016-17 for auctioning of linkages to consumers belonging to non-regulated sectors. Prior to auctions, coal linkages were being allocated on the recommendation of a government committee.
The next round of linkage auctions will be for captive power producers.
